Week ahead: Nvidia earnings dominate, as markets await FOMC and RBA minutes

Monday:

BoE Bailey appearance

A quiet Monday session sees the Bank of England governor Andrew Bailey make an appearance late in the day, with market pricing for potential rate cuts in 2024 bringing a need for central bankers to exert greater influence over expectations going forward. Markets are currently pricing in 75 to 100 basis points worth of rate cuts. However, commentary from a number of BoE members would insinuate a believe that interest rates may need to stay elevated for longer than markets are currently pricing. Watch out for potential GBP volatility around this appearance.

Tuesday:

RBA minutes

The RBA has been somewhat of an outlier of late, with the Australian central bank raising rates by an additional 25-basis points this month. The relative strength of the Australian dollar in the past week does highlight expectations that we could see additional tightening from this central bank. With that in mind, keep an eye out for any sign that the bank are happy to leave rates steady from here, or plan additional hikes in the face of elevated inflation.

FOMC minutes

The Federal Reserve kept the fed funds rate target steady at 5.25-5.5% in November, with markets now pricing in a mere 1% chance that we see an additional rate hike over the coming months. This goes against the dot plot which had signalled an additional hike, although the recent weakness in the jobs market and return to disinflation appear to be ruling out such a move. However, we have seen markets move in the opposite direction, pricing in 100-basis points worth of cuts in 2024. With those expectations providing a big disconnect from the dot plot outlook for just 50-basis points of easing, these minutes provide a potential opportunity for market and FOMC expectations to better align.

Nvidia Q3 earnings

Coming late in the third quarter earnings season, NVIDIA probably represents the most notable company left to report. This tech giant has been at the forefront of the Artificial Intelligence revolution, and the trajectory of their revenues should serve as a wider barometer for adoption of this leading technology. With so many companies pushing into AI as a means of growth, continued strength for NVIDIA earnings would likely provide a welcome boost for the wider tech sector. The dramatic ramp-up in Nvidia shares has many believing that their growth has already been priced in, and thus shareholders will be keen to see the company drive earnings higher to justify their lofty valuation.

Wednesday:

UK Autumn Statement

UK chancellor Jeremy Hunt steps up to provide the latest Autumn statement on Wednesday, with markets keeping an eye out for any particular pro-growth policy shift. Unfortunately, the increase in borrowing costs over the course of the past two years will likely restrict the scope for any notable tax cuts. There has been plenty of speculation over a potential cut to inheritance tax, although traders will be looking out for any specific policy changes that might impact a sector or the economy as a whole.

US Core Durable goods

With markets highly sensitive to any shift in economic direction, the latest core durable goods orders figure should be key. Weakness in US economy could bring forward expectations for the initial rate cut, with markets already pricing a 35% chance that the Fed cut rates as early as March. That seems highly unlikely unless we see Jerome Powell’s hand forced by a significant deterioration in the economic outlook.

Thursday

Eurozone and UK PMI surveys

A raft of PMI surveys are due to be released over the course of the morning in Europe, with markets looking for fresh signals over the direction of the region. With most of the countries exhibiting sub-50 readings across both manufacturing and services, Europe already looks to be contracting as things stand. Further weakness would pile pressure on the ECB and Bank of England, with markets likely adjusting their expectations around the timing of the first 2024 rate cut.

Friday

US PMI survey

The US economy has been faring better than its European counterparts, with October’s manufacturing (50) and services (50.6) PMI figures managing to narrowly stay out of contraction territory. However, the close proximity to that key threshold does provide the basis for a potential market reaction if we see either of these numbers break into contraction.