This Week Ahead: EU Ministers, Inflation Data, & Earnings Reports

This week, a plethora of events may garner the attention of many market participants as crucial inflation data, rate hikes, and earnings reports from various companies may shed light on the state of the economy. Here’s what you need to know about some of this week’s upcoming events and how these have affected the markets thus far:

EU Finance Ministers Meet in Brussels 

EU finance ministers are expected to meet today, Monday, in Brussels to discuss the effects of the Russia-Ukraine war. With the devastating war still ongoing since February 2022, and bringing with it calamities, both the loss of human lives as well as shifting the trajectory of many market sectors, traders and investors may want to keep an eye out for today’s meeting to see if any major decisions will be reached. Any new sanctions on Russia may cause distinct market volatility, especially across the commodities sector, and energy commodities in particular, as these are heavily dependent on Russian resources. (Source:Reuters)

As it stands, Oil (CL), a major energy that is known to be susceptible to changes in light of the Russia-Ukraine war, is trading lower by 1.41% as of the time of writing. The recent slump may be driven by fears ahead of the US CPI report due to concerns surrounding further rate hikes to tame inflation. Nonetheless, it is worth noting that this drop was preceded by a rise in Oil prices on Friday after Russia said that it would cut crude production in response to the sanctions Western countries imposed on it. Furthermore, in addition to the war in Russia, the ministers are expected to discuss the EU’s financial status as well as a recovery plan for Germany’s economy among other issues. 

US CPI Release: Has Inflation Shifted?

CPI, a key indicator and measure of inflation and deflation, will be reported by the world’s biggest economy on Tuesday. Tuesday's upcoming CPI release will reveal a lot about the state of the economy, in general, and the US economy, in particular, and the markets are already reacting ahead of the report. 

As such, Forex is shifting as the US dollar hiked to a 5-week record high on Monday due to traders and investors speculating that the Federal Reserve will likely maintain their hawkish interest rates hikes following the release. Consequently, on Monday, one of the most traded Forex pairs, the EUR/USD (EURUSD) fell by 0.06% as of the time of writing. 

Investors’ and traders’ apparent fears may be backed by the fact that analysts expect the upcoming US CPI to reveal a rise in consumer prices, as January and last Friday's Labor Department CPI revision indicated a rise in consumer prices. If indeed, inflation rates show a rise, then the Federal Reserve will likely continue hiking interest rates to combat inflation and vice-versa. Whatever the data shows tomorrow, it might have crucial implications for the market as a whole.

Moreover, in addition to US CPI, the UK is expected to report its CPI data on Tuesday. Some economists predict that the data will likely show a slowdown in UK inflation, but whether or not this will hold true is yet to be seen. Additionally, traders may want to keep a keen eye on other major upcoming market indicators in the US such as US housing stats, PPI, and initial jobless claims are set to be released on Thursday. 

Earnings Reports: Airbnb, Coca-Cola, and Doordash

A multifaceted earnings season is set to continue this week as mixed companies like Airbnb, Coca-Cola, and Doordash are scheduled to report their quarterly figures. One of those companies is American multinational beverage giant, Coca-Cola (KO), which is scheduled to report its Q4 2022 earnings before the ring of the bell on Tuesday.

While many companies seem to have fallen in 2022 in face of inflation and economic uncertainty, Coca-Cola was relatively stable and even gained 7.2% throughout the last year. Analysts expect an EPS of $0.45 and about $10 billion in revenue. Moreover, it is expected that the company will have grown by 14% in revenue and 6% in EPS YoY. 

Tuesday also marks an earnings report for property rentals provider, Airbnb (ABNB), which is scheduled to report its financial results for the fiscal year ending December 2022, after market close. As it stands, despite the fact that the company seems to have faced headwinds last year as it wiped about half of its value Wall Street seems to be bullish. According to analysts, Airbnb is expected to report an EPS of $0.27 which amounts to a YoY rise of 237.5%, and revenue is expected to come in at $1.86 billion which is 21.6% higher than last year’s quarter’s figures. If these positive predictions materialize, the company may be able to sustain the 28.2% rise it obtained in 2023 so far. 

American delivery company, Doordash (DASH), is also scheduled for a positive earnings report this week. The delivery giant is expected to release quarterly earnings this Thursday after the ring of the bell. While Doordash was certainly left unspared of 2022’s hurdles as it lost a whopping 66.4% of its value, as of the time of writing it seems to have recouped some of these losses and gained 19% in 2023. Analysts posit a YoY earnings decline coupled with higher revenues. This means that while the company is expected to report an EPS decline of $0.70 its revenue is believed to stand at $1.77 billion which is higher by 35.9% from the same quarter the year before. 

In conclusion, this week ahead is certainly eventful. Market watchers may want to wait and see how these upcoming events play out and how the market will react.