Key events to watch in the week ahead: 27 January – 2 February 2025

This week’s overview

Attention this week has been centred around US President Trump’s policies following his inauguration, and it seems that markets are able to get through it with relative calm, at least for now.

His statements, rather than unsettling sentiments, seems to spark more optimism with talks of massive artificial intelligence (AI) investments, a dovish stance on interest rates and intent to manage inflation risks with lower oil prices. That paved the way for buyers to extend their interest towards risks, with the S&P 500 closing at a new record high.

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

US 4Q earnings season: Microsoft, Meta Platforms, Tesla, Apple

Market participants can expect a wave of megacap tech earnings next week, notably from Microsoft, Meta Platforms, Tesla and Apple. Analysts forecast that the 'Magnificent 7' will collectively see year-on-year earnings growth of over 17% across the next four quarters—significantly outperforming the 9% growth expected from the remaining 493 companies.

Given their relatively high valuations, market participants will likely look beyond the typical top and bottom-line beats, with attention to be focused on their growth trajectory ahead as well.

27 January 2025 (Monday, 9.30am SGT): China’s National Bureau of Statistics (NBS) Purchasing Managers Index (PMI)

China’s economic data has shown signs of stabilisation lately, but economic challenges remain. While the government achieved its 2024 gross domestic product (GDP) growth target of 5%, thanks to a series of stimulus measures and robust fourth-quarter exports, the economy continues to grapple with deflationary pressures, contracting home prices, weak consumer confidence and upcoming US-China trade uncertainties.

For December, China’s official manufacturing PMI fell more than expected to 50.1 versus the 50.3 consensus. Services activities expanded at its fastest pace in seven months however, revealing some stimulus policy success in driving domestic demand although external pressures remain.

Looking ahead, expectations suggest that the official manufacturing PMI will remain steady at 50.1, while the non-manufacturing PMI may ease slightly to 52.0 from 52.2. The data is expected to reinforce further stabilisation, but caution will likely dominate as the 1 February deadline for US tariffs, as laid out by US President Donald Trump, approaches.

29 January 2025 (Wednesday, 8.30am SGT): Australia’s 4Q consumer price index (CPI)

The Reserve Bank of Australia (RBA)’s preferred measure of inflation, the trimmed mean, rose by 0.8% in Q3 2024, allowing the annual rate to fall to 3.5% from 4.0% prior – locking in a seventh quarter of lower annual trimmed mean inflation.

The latest monthly CPI indicator showed further encouraging signs as well. Specifically, the monthly CPI indicator rose by 2.3% year-on-year (YoY) in November. Annual trimmed mean inflation eased to 3.2% YoY in November from 3.5% in October.

The preliminary expectation for the December 2024 quarter (Q4) is for headline inflation to rise by 0.5% QoQ for an annual rate of 2.2%. The more important core measure of inflation, the Trimmed Mean, is expected to rise by 0.6% QoQ, which would see the annual rate of Trimmed Mean inflation ease to 3.3%.

Inflation numbers in line with the above-mentioned expectations will allow the RBA to cut rates in February by 25 basis points (bp) to 4.10%, a probability that is 65% priced.

30 January 2025 (Thursday, 3am SGT): US Federal Open Market Committee (FOMC) meeting

At its December meeting, the FOMC cut rates by 25 bp to a range of 4.25% to 4.50%, as widely expected, for a total of 100 bp of rate cuts since September. However, policymakers’ projection of only two more 25 bp rate cuts in 2025 was more hawkish than the three cuts expected by most markets.

Additionally, the Federal Reserve (Fed)'s revised outlook, which included a lower unemployment rate and a higher forecast for GDP and core inflation, was accompanied by a rise in the Fed's terminal rate to 3.125% from 2.875%.

Since December, US inflation data has met expectations, bolstering confidence that inflation is continuing its downward trend while economic activity data has remained relatively robust. Considering the Fed’s recent guidance and the need to assess how the economy reacts to last year's 100 bp of rate cuts, the Fed is expected to hold rates steady next week and retain its easing bias.

30 January 2025 (Thursday, 9.15pm SGT): European Central Bank (ECB) interest rate decision

The ECB is widely expected to ease rates by 25 bp at the upcoming meeting, bringing the deposit interest rate to 2.75% from the current 3%. This will mark the fifth interest rate cut since June 2024, in line with policymakers’ support for continued monetary easing.

Despite some pick-up in inflation in recent months, the basis behind the cut is likely to stem from the shift in priority towards supporting growth. Just last month, policymakers have revised down their economic growth expectations once more from earlier projections, reflecting greater urgency to bring rates down to neutral (1.75%-2.0%) from current restrictive territory. Notably, economic activities in Germany remain sluggish, with manufacturing PMI still in contraction despite a return to growth in the services sector.

31 January 2025 (Friday, 9.30pm SGT): US core Personal Consumption Expenditures (PCE) price index

For November, headline PCE prices in the US increased by 2.4% YoY, rising further from a three-year low of 2.1% in September. The core PCE price index, the Fed's preferred measure for underlying inflation, rose by 0.1%, the least in six months. This saw the annual rate of core PCE prices stable at 2.8% in December and below forecasts of 2.9%.

Looking ahead, headline PCE is anticipated to rise to 2.6% YoY. Core PCE inflation is expected to again remain stable at 2.8%.