Flux seen easing in stock markets this week, earnings wind down

Dubai: As global stock markets continue to track higher, investors will watch for new developments on the $1.9 trillion fiscal stimulus package in the world’s largest economy, the US.

In the US, several dozen firms are releasing earnings, including retail giant Walmart. Among economic data re-leases, the prominent ones include the producer price index, retail sales and a batch of housing statistics.

While the prospects of a multi-trillion government spending program could continue to boost stock markets, earn-ings season is beginning to wind down with only a few big names yet to report.

US Fed minutes for clues

The US Federal Reserve on Wednesday will also release minutes from its last meeting, and investors will dig into those for any insight into the central bank’s view on inflation.

While some market analysts had anticipated a package of $1 trillion or less if there was a negotiated deal, that now looks unlikely as strategists have changed their view on the proposed $1.9 trillion package.

The reason being there is lesser-than-expected pushback to US President Biden’s proposed stimulus, so policy analysts at US-based Cornerstone Macro noted that a price tag of around $1.5 trillion seems likely – which is high-er than initially thought.

How big will be the US stimulus?

The analysts say that they say they expect a bill to come up for a vote during the week of February 22, and that it could become law by the first week of March, while adding that investors will stay focused on its progress.

Elsewhere, key economic events this week include the Germany’s key ZEW reading, an indicator of the econom-ic sentiment, UK inflation and retail sales, and then the round of global manufacturing figures on Friday.

On the UK corporate front, full-year numbers are expected from Britain’s banks Barclays and Natwest, miners BHP, Rio Tinto and Glencore, and from cigarette maker British American Tobacco.

Q4 earnings winds down

Friday marks the official end of US earnings season, which has been largely better than expected, and trading activity was more normal in recent days after weeks of high volume transactions.

In Asia, many of the markets were closed for trading on Friday, including those in Hong Kong and China, for Lu-nar New Year festivities. Japan’s Nikkei finished the day down modestly, leaving it up 2.6 per cent for the week. Equities in Europe were mixed.

As investors get ready for the holiday weekend that will see equity markets closed on Monday, they will continue to monitor progress for the Biden stimulus plan as well as the president’s efforts on infrastructure spending and addressing the global chip shortage.

More vaccine-related progress

On the pandemic front, Biden had announced that the US finished deals for 100 million additional vaccine doses from Pfizer and Moderna and that the two companies will deliver both these new and the prior orders quicker than previously expected – which will be a boost to the stocks in the days ahead.

Major US stock indexes on Friday finished on a higher note, notching a series of record highs on the back of op-timism about a fresh round of COVID-19 spending, strong corporate earnings and progress in rollouts of vaccines to combat the viral pandemic.

For the week, the Dow had finished up 1 per cent, the S&P 500 closed with a 1.2 per cent gain, while the Nasdaq Composite booked a 1.7 per cent weekly advance.