Look Ahead 27/9/23: BoJ minutes; German consumer confidence; Saga; Micron results

(Video Transcript)

Can Japan do more to stimulate the economy?

Hello, I'm Angeline Ong and welcome to your Look Ahead to Wednesday, 27 September 2023. We start in Japan where we have the Bank of Japan (BoJ) minutes from its last meeting. Of course, the BoJ will be in focus because it seems like its governor, Kazuo Ueda, is putting growth ahead of inflation and curbing inflation.

It has to be said that it doesn't have as much of a problem as other countries, including the United States., the United Kingdom and the Euro Zone. However, there are some concerns that perhaps Japan isn't doing enough to spur economic growth.

Ueda has recently told the government's top economic council that it was important to nurture positive signs of change emerging in corporate behaviour and also suggested that they wanted more growth and companies to invest in that rather than paying attention to future interest rate hikes on the economy.

Just checking in on this area for you on 22 September, because you can see that move over there when the cross rose slightly after the BoJ maintained its negative interest-rate policy.

Consumer morale starts waning

From Japan, we head to Germany where we've got consumer confidence figures. It has to be said that cracks are emerging, not just in Germany, but across Europe as well in terms of consumer moral.

This is not helped by the high interest rates that have been dealt to consumers as the European Central Bank (ECB) tries to clamp down on inflation. ECB President Christine Lagarde has repeated the bank's guidance that neither promises nor rules out further rate hikes.

High European interest rates pressure credit ratings

In fact, it comes at a time as well that the trend in credit quality is souring for many corporates. S&P Global said recently that the near-stalling of Europe's economy due to these high interest rates will potentially put pressure on the credit ratings on the region's companies, property firms and banks and could drive up default rates.

And amid all this, as governments across the world are still grappling with stubbornly high inflation, we are also looking out for a potential rise in oil prices, given the movement that we've seen on the supply side recently.

You've got durable goods orders out of the US and the EIA crude oil inventories. Oil is a key one to watch because as we approach the end of the year, it could be the final piece of the puzzle as to where inflation goes.

Oil prices fall slightly

Here's a look at US crude for you. As you can see that it has been traversing higher since that June level, some 30 percent gain there in terms of prices. Oil prices were mostly flat in the last session and fell slightly in this session.

It's currently down around half a percent due to a stronger dollar, which compounded concerns that demand for fuel might be held back by major central banks, keeping interest rates higher for longer than expected.

On the corporate front, we have first half-earnings from Saga and also Pendragon.

And from the US, the key one to look out for is Micron Technology. Micron and many other chip makers first saw a glut and then there weren't enough chips as a supply chain crisis.

Is the global economy slowing down?

And now there are concerns that the world economy might be slowing down and that might mean less demand for things that power everything from mobile phones to fridges to our televisions and cars. Deutsche Bank did upgrade the stock earlier in the month to buy from hold, raising its price target. So I'm showing you the shares here.

Micron is an all-session stock on the IG platform. So Deutsche Bank has upgraded the stock and raised the price target to $85 from $65, saying that they expect Micron to forecast its first-quarter sales and earnings to share above estimates on the street, with commentary suggesting further improvement in the next few quarters. But we'll find out shortly.

Until then, that's it for now. For more market moving news, I'll be back on Beat the Street at 1.30pm London time to give you a heads-up to the US trading day. And my colleague, IG's Jeremy Naylor, will be on at 7.30am to do the same for the European market open. Follow me on Twitter @AngelineOng and at IG.com as well. This is IGTV.