Look Ahead 20/9/23: China loan prime rates; Fed; UK CPI; FedEx

(Video Transcript)

What can be done to kickstart China?

Hello, I'm Angeline Ong, and welcome to your Look Ahead to Wednesday, 20 September 2023. There is plenty of central bank action. Of course, it is the day that everyone's been waiting for: the Federal Reserve (Fed) decision.

However, before that, we've got the numbers out of China, also particularly interesting. These are the loan prime rates. Just taking a look at the yuan versus the dollar here, because China has been a very interesting space for many of our traders who trade in these financial-related instruments for that volatility.

China, of course, has been unleashing quite a few rounds of stimulus to try and boost the economy, where many analysts and market watchers and investors, indeed, had been hoping for a strong reopening, but that didn't kind of come through, to be honest. And many are now waiting to see what China does in order to get its economy kickstarted.

It has unleashed support in the form of monetary support. It cut its reserve requirement for all banks. If you remember, this was a few months ago to boost liquidity. And also, the country has supported its sluggish housing sector. So, it will be interesting to see what other measures are coming in the next few months. They are, indeed, expected to be more stimulus programmes en route.

In the United Kingdom, we've got the consumer price index (CPI), August expectations, 7.1% year-on-year. This has also been an interesting space, given that many data points are showing a return of stubbornly high inflation and those price pressures increasing again.

Fed keeps everyone guessing

And from the US, the set piece of the week is the Fed, of course. We're going to get the decision. The two-day policy meeting kicks off on Tuesday. The Fed is widely expected to keep rates on hold for now. So, the economic projections will be key: what they say about future rates, whether they still need to rise, given that the US labour market is still robust.

Similar to the UK, we are seeing some pressure points rising for inflation. From March 2022 through May 2023, the Fed has raised rates at 10 successive meetings, by anywhere from a quarter to three-quarters of a point. This has been to fight off the worst rise in inflation since the 1980s.

And on the corporate front, we have four-year earnings from Dunelm. This is the store chain that sells everything from kitchenware to homeware.

And in the US, the one that's interesting is FedEx, first-quarter earnings. FedEx, particularly interesting for us and our clients, because not only has it given us and our clients a lot of volatility, it is also one of those special stocks that gives us a bird's-eye view of how other industries are doing.

FedEx gained from rivals' bad luck

FedEx itself has benefited from the misfortunes experienced by its rivals, United Parcel Service (UPS) and Yellow, during its latest quarter. So, analysts expect the Memphis-based company to report higher year-on-year profit for the fiscal first quarter that ended on 31 August.

In terms of its shares, we're seeing a very strong uptrend still in play here since around December. Looking at these lines here, you can see that channel moving upwards since around December last year and early January. And it has tapered off slightly there. And if volumes hold, it could potentially hit that green line there pointing around 24,931.

However, if the long-term channel remains in play and we have, as expected, that higher year-over-year profit, we could see an upturn there, which means that this higher high will be maintained on a longer-term view. So, we'll get those earnings for you as they break.

Until then, that's it for now. For more market-moving news, I'll be back on Beat the Streets at 1.30pm London time to give you a heads-up to the US trading day. And IG's Angela Barnes will be on at 7.30am on Early Morning Call to give you the heads-up to the European market open. Follow me on Twitter @Angeline Ong. This was IGTV. Thank you.