Week ahead: Digital Davos, UK jobs data, US GDP and Biden's first week

Lucy Harley-McKeown
·4-min read
Pedestrians pass a screen showing a graph of the FTSE 100 share index,  in west London October 6, 2008. Britain's leading share index recorded its biggest ever one-day points fall on Monday with banking and commodity stocks taking a battering as the fallout from financial crisis once again overwhelmed global markets.      REUTERS/Toby Melville (BRITAIN)
Markets will be watching key policy makers and data releases this week, as the world continues to reel from the fallout of the coronavirus. Photo: Reuters/Toby Melville

This week is due to be comparatively quiet compared with the world events that have consumed the rest of January, however there is still some data on the slate that will provide crucial insights into economies around the world.

The World Economic Forum (WEF), usually held in Davos in Switzerland, is due to kick off on Monday, although this year it will be a digital offering due to the pandemic.

UK data will give a sense of how the employment market is holding up under pressure, while politicians and investors alike will keep an eye on how lockdowns are playing out across the nation.

On Friday, Boris Johnson revealed in a press conference that the “Kent” variant of the coronavirus is thought to be more lethal than the original strain, this could knock markets of kilter again.

Meanwhile Joe Biden’s new team in the US will get the lay of the land as his presidency begins, with fourth quarter gross domestic product (GDP) data, a Federal Reserve press conference and consumer confidence data.

Brexit and its bureaucratic issues continue to play out in the UK, while European Central Bank (ECB) president Christine Lagarde may give an indication on future rate decisions by the institution.

Stories for investors to keep an eye on going into Monday:

UK jobs market, retail numbers and a house price index

People walk past a Government sign warning people to stay at home on the High street in Winchester, Hampshire, during England's third national lockdown to curb the spread of coronavirus. Picture date: Wednesday January 20, 2021. (Photo by Andrew Matthews/PA Images via Getty Images)
Unemployment data will shine a light on whether furlough is making a big enough difference for UK workers. Photo: Andrew Matthews/PA Images via Getty Images

Rishi Sunak’s policy decisions will be put to the test this week, as UK average earnings and unemployment numbers will give an indication on how much support the furlough scheme has given workers and businesses.

The scheme was set to expire in October, however worsening COVID-19 case numbers meant an extension seemed like an imperative. Now, it’s due to expire in April. Redundancies had increased ahead of that original deadline as firms hard-hit by the pandemic prepared to reduce headcount.

According to analysts at ING, “there’s some evidence firms began taking action weeks before the changes – redundancies peaked in September, and weekly data shows the jobless rate had correspondingly climbed by around 1 percentage-point to 5.5% in late October.

“It is likely this will have pushed towards 6% in November (though remember the headline figure we get is a three month average).”

ING predicts that if furlough is unwound too soon unemployment may rise 7%-8%.

Also on the slate: the CBI trades survey on Tuesday, British Retail Consortium shop price index numbers on Wednesday and the Nationwide house price index on Friday.

Upcoming company results:

  • Quiz (QUIZ.L) — half year (Tuesday)

  • WizzAir (WIZZ.L) — Q3 (Thursday)

  • Diageo (DGE.L) — half year (Thursday)

  • Fever Tree (FEVR.L) — full year (Thursday)

European Central Bank decisions, business climate and Germany’s Ifo index

Former French Finance Minister Christine Lagarde smiles as she arrives at the International Monetary Fund headquarters for her first day as head of the IMF in Washington July 5, 2011.     REUTERS/Kevin Lamarque  (UNITED STATES - Tags: BUSINESS HEADSHOT POLITICS)
ECB president Christine Lagarde will give an indication on how the bloc intends to tackle tough economic conditions going forward. Photo: Reuters/Kevin Lamarque

ECB president Christine Lagarde is to speak in the afternoon on Monday. Investors will be watching for an indication of how the bloc intends to tackle fluctuating caseloads of the virus and their effect on the economy.

A raft of German data is also due. The Ifo business climate index will give a temperature check on Europe’s largest economy, while business expectations will give a measure on sentiment among business owners.

Europe-wide data on Thursday also includes business climate, business confidence and consumer inflation expectations.

Biden’s first week: US GDP a Fed meeting and house market data

WASHINGTON, DC - JANUARY 22:  President Joe R. Biden speaks about the economy before signing executive orders in the State Dining Room at the White House on Friday, Jan 22, 2021 in Washington, DC. (Photo by Jabin Botsford/The Washington Post via Getty Images)
President Joe R. Biden speaks about the economy before signing executive orders in the State Dining Room at the White House on Friday, Jan 22, 2021 in Washington, DC. Photo: Jabin Botsford/The Washington Post via Getty Images

Biden already knows he has a hill to climb when it comes to shoring up the US economy, but this week will be particularly crucial in how he backs up his stimulus proposals.

GDP data is due on Thursday, while a statement from the Fed will show how dovish or bullish the central bank wants to play it alongside new leadership.

Tuesday also brings an indication of how the US housing market is faring, with a house price index and mortgage rates and applications data.

There will also be crude oil inventories — a sector that has felt pain amid widespread lockdowns and shuttered factories.

Key data elsewhere:

Japan will publish its monetary policy meting notes on Monday, while Chinese industrial profit data will give an indication on how one if its biggest industries is faring.

Big Tech earnings season gets underway with Microsoft (MSFT), Apple (AAPL), Tesla (TSLA) and Facebook (FB) results all due.

Watch: What does a Joe Biden presidency mean for the global economy?