UK banking and US retail sectors in focus

The People's Bank of China

The People's Bank of China kept the rate of its medium-term lending facility at 2.5% on Sunday. In its statement, the People's Bank of China (PBOC) said it sought to "maintain banking system liquidity reasonably ample," particularly after the week-long Lunar New Year holiday. On Tuesday, China loan prime rates are expected to also remain unchanged. The one-year loan prime rate, used for corporate and household loans, should stay at 3.45% for a fifth straight month, while the five-year rate, the reference for mortgages, is likely to remain at 4.2% for the seventh month in a row.

Central banks

More news from other central banks is due this week, starting on Tuesday with the Reserve bank of Australia (RBA) minutes. Earlier this month, the Reserve Bank of Australia kept its official cash rate on hold at 4.35%, noting that higher interest rates were working to reduce inflation. On Wednesday, traders will look at Federal Open Market Committee (FOMC) minutes for any indication of when US policymakers intend to start cutting rates. After last Friday's US Producer Price Index (PPI), which showed its biggest growth since August, a rate cut in March seems even more unlikely.

Currys

Currys shares could react to the news that Elliott Advisors confirms it is considering a possible new cash offer for the retailer. The news was first unveiled by the Times yesterday. On Saturday, Curry's said it had received a 62p per share offer from Elliott Advisors, valuing the company at £700 million. This first offer was rejected by Currys.

The Rightmove house price index

The Rightmove house price index shows a first rise in six months in annual terms as demand from buyers strengthened. Asking prices for homes rose 0.1% in February compared to a year earlier, the first annual increase since August 2023. Prices increased by 0.9% in January.

NatWest

After NatWest reported its largest yearly profit since 2007 last Friday, other main UK banks are expected to post similar performances this week, as they benefited from higher borrowing costs. Barclays will publish its annual report on Tuesday, followed by HSBC on Wednesday, Lloyds Banking Group on Thursday, and Standard Chartered on Friday. The market will be particularly attentive to their outlook, as interest rates could sometimes decline this year.

The banking sector

Outside the banking sector, Rio Tinto is due to post its annual earnings tomorrow, and Rolls Royce on Thursday. For Rio Tinto, the focus will be its final dividend. The miner is likely to hold back on additional shareholder returns as it readies its joint Simandou iron ore project in Guinea and an expansion at its Oyu Tolgoi copper mine in Mongolia. As for Rolls Royce, outlook will be key to retaining investors. Some of them could be tempted to take profit after a stellar year that saw the Rolls Royce share price rise by 200%.

Walmart

Despite the challenges of rising inflation,Walmart has so far found a way of dealing with higher input costs and keeping competitive prices for its customers, which translated into its earnings beating in three out of the previous four quarters. Walmart is forecast to post earnings of $1.64 per share on revenue over $170 billion tomorrow before the market opens. This compares to earnings per share (EPS) of $1.50 and revenue of $151.47 billion in the same quarter a year ago. Analysts, however, predict a 11% increase in US e-commerce sales, which would be the slowest rate of growth in 2023.

NVIDIA

After the US closes on Wednesday, all eyes will be on NVIDIA . The street anticipates EPS of $4.58 and revenue of $20.37 billion. For the same quarter last year, NVIDIA posted earnings of 88 cents per share on revenue of just over $6 billion. A phenomenal rise that translated into gains of over 220% over the past 12 months. Year to date, the stock has already risen by 50%. The development of AI means that businesses around the world have the opportunity to operate more efficiently and improve their market positions, and NVIDIA products have now become essential to achieve these objectives. The NVIDIA data centre business, which comprises cloud and AI services, could see its revenue come close to $17 billion, more than four times the amount reported a year ago.