Weathering Report

16 November 2023

There are a slew of earnings reports scheduled for Thursday on the corporate calendar that will shed more light on the health of the global consumer market, as well as reports from U.S. retailers.

Expectations for Walmart rose after shares of peer Target rose nearly a fifth on Wednesday as its pre-holiday sales forecast beat consensus estimates and it gave a positive assessment of its supply chain.

Walmart is expected to report sales growth in the third quarter thanks to strong demand for cheap groceries and essentials for inflation-hit Americans, so investors are paying attention to more than just the company's forecast for the holiday season and its comments on margin pressures.

Chinese e-commerce giant Alibaba Group will set the tone early in the day when it announces results, reports on the company's restructuring and investors hear from new CEO Eddie Wu for the first time.

On Thursday, a number of central bankers, including ECB President Christine Lagarde, will speak at various events amid a growing consensus that the policy tightening cycles of major central banks are over, a belief reinforced by recent reports on inflation and other indicators.

Data released on Wednesday showed U.S. producer prices fell at the fastest pace since April 2020 and U.K. consumer inflation beat forecasts. Oil prices fell more than 10% year-on-year.

With U.S. producer price data also reinforcing the disinflation theme, this week's data led financial markets to believe that Fed Chairman Jerome Powell will leave the Fed Funds target rate unchanged at 5.25%-5.50% at the end of next month's meeting, according to the FedWatch tool.

Meanwhile, in Asia, Japanese exports are struggling due to declining shipments of chips and steel to China.

October data in China showed continued recovery in industrial production and retail sales, but there is still weakness in the real estate sector, which continues to weigh on the economy.

However, markets on the mainland have been supported by promises of more stimulus, with the central bank injecting a significant amount of cash through medium-term loans this week.

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