Key events to watch in the week ahead: 20 – 26 January 2025

This week’s overview

US consumer price index (CPI) data this week has eased inflation jitters, helping to restore risk sentiment after a dip in early January. Robust earnings from major US banks contributed to the risk-on environment as well, although focus will now shift to upcoming megacap tech earnings over the coming weeks. Given their significant role in driving Wall Street’s performance over the past year, their results will likely play a crucial role in shaping the direction of major US indices moving forward.

Heading into the new week, here are five key events to watch.

US 4Q earnings season: Netflix, Johnson & Johnson

Major US banks’ results have offered a bumper start to the US earnings season, topping estimates for both top and bottom-line, while guidance has been generally well-received as well. JPMorgan Chase posted record profit, thanks to a jump in fixed income trading revenue and investment banking fees. The Financial Select Sector SPDR Fund is up close to 5% over the past week.

Attention will be heavily centred around Netflix’s earnings in the upcoming week. Expectations are for 4Q revenue to grow by 14.5% year-over-year to US$10.1 billion, with earnings per share (EPS) projected to nearly double to US$4.19, up from US$2.11 last year.

20 January 2025 (Monday, 9.00am SGT): China’s one-year & five-year loan prime rate (LPR)

China’s one-year and five-year loan prime rates are expected to be kept unchanged at 3.1% and 3.6%. Chinese authorities have increasingly relied on forward guidance for policy adjustments, with previous LPR cut in October signalled in advance by the People's Bank of China (PBoC) Governor. A more passive approach this time round suggests that authorities are adopting a wait-and-see stance as more clarity on Trump’s policies is expected in the coming weeks.

We still anticipate further cuts to benchmark lending rates, just as China’s central bank has reiterated its commitment to easing measures lately. However, there remains some scepticism about the effectiveness of monetary policy, given that past rate cuts aimed at boosting liquidity have not led to a sustained recovery. Currently, China’s credit growth remains subdued, and both consumer and business confidence are still low.

24 January 2025 (Friday, 7.30am SGT): Japan’s inflation rate

Tokyo consumer inflation continues to accelerate in December for the second straight month. The headline Tokyo CPI reached 3%—its highest level since October 2023—while the core CPI hit a four-month high at 2.4%.

Strengthening underlying price pressures in the Tokyo inflation data could feed into the nationwide inflation data at the upcoming week, offering the conviction for the BoJ to act sooner rather than later in rate hikes. Additionally, headlines of broadening wage growth extending into 2025 also suggest that the conditions for a BoJ rate hike are increasingly being met.

24 January 2025 (Friday, 11am SGT): Bank of Japan (BoJ) interest rate decision

Market expectations are increasingly focused on a 25 basis point (bp) rate hike by the BoJ at its upcoming meeting, potentially raising the policy rate from 0.25% to 0.50% after a four-meeting pause. The renewed speculation stems from comments made by BoJ Governor Kazuo Ueda, who indicated that policymakers will deliberate on the possibility of a hike, with some reference to the central bank's updated quarterly growth and inflation forecasts.

Strengthening underlying price pressures may likely see the BoJ revise up their inflation forecast at the upcoming outlook report. A notable 0.3% upward revision to the previous 3Q gross domestic product (GDP) figure further indicates a supportive growth outlook.

However, a key factor that may influence the BoJ's decision was the need for greater clarity on the economic policies of the incoming US administration. Therefore, any comments from Trump following his inauguration should be closely monitored.

24 January 2025 (Friday, 10.45pm SGT): US flash manufacturing and services Purchasing Managers' Index (PMI)

Positive economic surprises from the US have led market participants to recalibrate their expectations to price for only a single 25 bp rate cut through 2025. Economic resilience has been the primary driver behind calls for a more patient Federal Reserve (Fed), with the US economic surprise index back on the rise in recent weeks.

The upcoming US flash manufacturing and services PMI data could further support the narrative of economic resilience. In December 2024, the US manufacturing PMI dropped to 49.4 from 49.7 in the previous month. However, the services sector continues to show strong expansion, with two consecutive months of improvement, reaching its highest level since March 2022 at 56.8.