Key events to watch in the week ahead: 11 - 17 March 2024

This week’s overview

Wall Street extended its rallies this week, with the S&P 500 posting yet another new record high as rate-sensitive growth sectors, particularly semiconductors, powered on. Thus far, Federal Reserve (Fed) Chair Jerome Powell’s testimony has fallen short of the hawkishness that was initially expected, which paved the way for market participants to bask in optimism for impending rate cuts, potentially with the first in June this year.

Gold prices have extended its record run as well, tapping on a weaker US dollar, lingering geopolitical tensions and ongoing central banks’ purchases. Brent crude prices, on the other hand, remain locked in a tight consolidation but seemingly awaiting a catalyst to drive a new higher high.

As we head into the new week, here are four things on our radar.

12 March 2024 (Tuesday, 8.30am SGT): Australia’s National Australia Bank (NAB) business confidence

The NAB Business Confidence index increased to 1 in January following a 7-point rebound in December. Still, business confidence remains weak compared to historical levels, as cost pressures across the economy and slowing growth weigh on sentiment.

Business Confidence is expected to rise in the coming months as the focus shifts towards rate cuts from the Reserve Bank of Australia (RBA) during the second half of 2024 and inflationary cost pressures continue to ease.

12 March 2024 (Tuesday, 8.30pm SGT): US consumer price index (CPI)

Last month (January), headline inflation in the US rose by 0.3% month on month (MoM), allowing the annual rate of headline inflation to ease to 3.1% YoY from 3.4% prior, although higher than market forecasts of 2.9% YoY. Core CPI rose by 0.4% MoM, as the annual core rate of inflation held steady at 3.9%, a rate that was also higher than market forecasts of 3.7%.

After an initial shock, markets chose to look through the hotter January inflation data based on the view the rise was driven by one-time New Year price increases in the services sector (including medical, financial services, car insurance, and daycare) and an outsized rise in shelter costs.

Traders will examine this month’s CPI data closely to ensure that there are no repeats of those one-off price rises. If the number is hotter than expected, markets will unlikely be so forgiving. The expectation is for headline CPI to rise in February by 0.4% MoM, which would see the annual rate remain stable at 3.1%. Core CPI is expected to rise by 0.3% MoM which would see the annual rate cool to 3.7%.

13 March 2024 (Wednesday, 3pm SGT): UK gross domestic product (GDP)

The UK economy has contracted by 0.3% in 4Q 2023, putting the country officially in a recession (first time since Covid-19 in 2020) after contracting by 0.1% in 3Q 2023. Ahead, markets will be watching for any signs of improvement from the upcoming monthly GDP read, although the series of economic data thus far still suggest weak growth conditions in place and any recovery may still be meagre.

Further contraction in growth may raise bets that the Bank of England (BoE) may shift to a faster pace of interest rate cuts this year. Thus far, interest rate futures reflect that broad consensus are priced for the central bank to cut interest rate in August this year, with overall two 25 basis point (bp) cuts through 2024.

15 March 2024 (Friday, 10pm SGT): US University of Michigan (UoM) consumer sentiment (preliminary)

The US consumer sentiment index has been on a recovery trend over the past two years, coming in at 76.9 in February this year which marked a stark improvement since its 2022 all-time low of 50. Further improvement in the consumer sentiment index may aid to validate current soft-landing hopes, given that past historical recessions in the US tend to be accompanied with a sharp weakening in consumer sentiments and it clearly does not seem to be the case with current trend.

Ahead, expectations are for the preliminary reading for March to come in at 77.0, a slight uptick from the previous 76.9. Improving consumer sentiments may potentially provide some support to spending and hence, economic resilience.