Key events to watch in the week ahead: 3 – 9 February 2025

This week’s overview

Risk assets initially saw a sharp downside reaction following the release of China’s new artificial intelligence (AI) model, DeepSeek, but managed to regain their footing towards the end of the week. A series of megacap tech earnings may have helped to restore some calm, with reassurances that the US will maintain its lead in the AI race despite growing competition. With buyers having regained some confidence, the S&P 500 and DJIA appear poised to eye for yet another new all-time high ahead.

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

US 4Q earnings season: Alphabet, Advanced Micro Devices, Amazon.com

Megacap tech earnings will continue next week, with Alphabet and Amazon in the spotlight. Thus far, results from the Magnificent Seven stocks have leaned bullish, with Tesla, Meta, and Apple all seeing post-earnings gains. The exception is Microsoft, which fell more than 6% post-earnings, as its heavy AI investment failed to convince market participants on its return on investment (ROI).

Looking ahead, Alphabet is expected to report an 11.9% year-over-year increase in Q4 2024 revenue, with earnings per share (EPS) projected to rise 29.7%. Amazon’s Q4 revenue is forecast to grow 10% year-on-year, while EPS could surge 49.4%.

3 February 2025 (Monday, 8.30am SGT): Australia’s retail sales

The upcoming retail sales data will be the final key indicator ahead of the Reserve Bank of Australia’s (RBA) February meeting. However, following weaker-than-expected Q4 inflation, it is unlikely to alter market expectations that the RBA will cut rates next month.

In November, Australian retail sales rose 0.8% month-over-month, following increases of 0.5% in October and 0.4% in September. Growth was broad-based across all retail sectors, including department stores (1.8% vs. -0.3% in October), clothing, footwear, and personal accessories (1.6% vs. -0.7%), cafes, restaurants, and takeaway food (1.5% vs. 0.3%), household goods (0.6% vs. 1.6%), food retailing (0.5% vs. 0.2%), and other retailing (0.3% vs. 1.4%).

For December, retail sales are expected to rise by 0.5%. Meanwhile, the Australian interest rate market is pricing in a cumulative 90 basis points (bp) of RBA rate cuts for 2024.

3 February 2025 / 5 February 2025 (Monday/Wednesday, 9.45am SGT): China’s Caixin manufacturing and services Purchasing Managers' Index (PMI)

China’s economic conditions remain mixed thus far. While the economy has met its 2024 growth target of “around 5%”, much of the strength has come from exports, which may face headwinds from any upcoming US trade restrictions. Policy stimulus measures have also contributed to stronger-than-expected retail sales, but the risks are that momentum may be short-lived, as seen from multiple feeble recovery attempts over the past year.

Recent official PMI data underscores ongoing economic challenges. The January manufacturing PMI unexpectedly slipped back into contractionary territory at 49.1, missing the 50.1 consensus. Meanwhile, services activity fell sharply to 50.2 from 52.2 in December, signalling a significant slowdown.

Ahead, the Caixin manufacturing PMI is expected to come in at 50.2, reflecting a weaker expansion compared to the 52.2 in December 2024 and reinforcing the weakness seen in the official PMI.

6 February 2025 (Thursday, 8pm SGT): Bank of England (BoE)’s interest rate decision

At its December meeting, the Monetary Policy Committee (MPC) voted 6–3 to keep the Official Bank Rate at 4.75%, with three members favouring a 25 bp cut to 4.5%. The decision aligned with expectations, following a rise in twelve-month consumer price index (CPI) inflation to 2.6% in November from 1.7% in September.

Ahead of next week’s BoE meeting, UK headline inflation unexpectedly eased to 2.5% in December from 2.6% in November, coming in below the 2.6% forecast. More notably, core inflation fell to 3.2% from 3.5%—its lowest level since September and below market expectations of 3.4%.

Meanwhile, the unemployment rate rose to 4.4% from September to November, slightly above both market estimates and the 4.3% recorded in the previous two periods. This marks the highest level since the three months ending in May.

Given these factors, along with sluggish growth, the BoE is expected to cut rates by 25 bp next week to 4.50%. This would mark its third rate cut since the easing cycle began in August 2024. Markets anticipate a total of 70 bp in BoE rate cuts over 2025.

7 February 2025 (Friday, 9.30pm SGT): US non-farm payrolls

December’s Non-Farm Payrolls report was robust, with the US economy adding 256K jobs—well above market expectations of 160K—following a downwardly revised 212K in November. The unemployment rate edged down to 4.1% from 4.2%, coming in below forecasts.

After rising steadily in early 2024, the unemployment rate has hovered between 4.1% and 4.2% for the past seven months. This prompted the Federal Reserve (Fed) to note this week that "the unemployment rate has stabilised at a low level in recent months, and labour market conditions remain solid."

For January, the US economy is expected to add 205K jobs, with the unemployment rate holding at 4.1%—a scenario that would support the view that the Fed will keep rates on hold until mid-year.

9 February 2025 (Sunday, 9.30am SGT): China’s CPI and producer price index (PPI)

China’s consumer prices remained subdued in December 2024, rising just 0.1% year-over-year, underscoring persistent deflation risks as domestic demand struggles to gain traction despite recent policy stimulus. Producer prices have also remained in contraction since October 2022, weighed down by overcapacity. However, a silver lining is that core consumer prices, which exclude volatile food and fuel costs, improved for the third consecutive month.

Looking ahead, China’s upcoming CPI is expected to remain unchanged at 0.1% year-over-year, while factory-gate inflation is forecast to improve slightly to -2.1% from -2.3% previously. While this may signal some stabilisation, the ongoing subdued price pressures are likely to reinforce expectations for further rate cuts and reserve requirement ratio (RRR) reductions to support the economy over the coming months.