Dubai: Global stocks markets are expected to stay focused on any more possible stimulus measures in the US, even as the January 20 inauguration of President-elect Joe Biden gets closer.
In the US, and in markets elsewhere, corporate earnings will begin to roll out at the end of the week with big banks, while US inflation data could be important for investors who have been speculating on higher inflation later in the year.
Stocks markets are expected to continue to look past the coup attempt by a mob that overtook the Capitol Building in support of US President Donald Trump’s comments made in the backdrop of the US election.
Another stimulus in focus
However, the coming week it is stimulus that should get the most attention from investors, who are betting the new Democratic majority in Congress will move quickly and that it could consider a package of $1 trillion or more.
Stocks on Wall Street rose to record highs in the past week, boosted in large part by the idea of a bigger stimulus package in the world’s largest economy, the US.
The incoming administration of President-elect Joe Biden is expected to deliver an even bigger stimulus package than had been expected with a divided Congress. Biden said Friday the total will be in “the trillions of dollars”.
Q4 results to trickle in
Fourth-quarter earnings season begins with the rollout of reports from US-based lending majors on Friday, with corporate results from JPMorgan, Citigroup and Wells Fargo due.
However, strategists said little will matter but stimulus, which economists expect will ease the impact of the surging virus on the economy. The stock market may also begin to pause as soon as the coming week, as the virus surge continues and investors worry vaccines are being too slowly deployed.
With the S&P 500 up about 16 per cent since November 4, investors may begin to think it is getting ahead of itself, but in the weeks ahead earnings season should be a positive for stocks.
More crucial economic data
This week sees the release of some important data, such as Chinese and US CPI and the monthly UK GDP figure, but the main focus is on corporate news.
While banks begin reporting in the US, In the UK the flood of post-Christmas trading statements begins, including names like Tesco, ASOS and Boohoo, also updates from Taylor Wimpey, Persimmon and William Hill.
The latest corporate reports come amid a renewed rise in new COVID-19 infections, but analysts say that the prospects for a cyclical recovery fueled by vaccination programmes and more fiscal stimulus from the new administration provide hope of a better year ahead.
UAE bourses start week up
The bourses in Dubai and Abu Dhabi rose on Sunday, as investors cheered the lifting of UAE-Qatar restrictions and welcomed how this can improve investment prospects for the economy.
The Dubai Financial Market (DFM) gained 1.85 per cent 2,674 points, while the Abu Dhabi Securities Market (ADX) edged up 0.2 per cent at 5,174 points.
Moreover, crude prices are currently trading at its highest since late February after a fall in US stockpiles added further support following Saudi Arabia’s unilateral decision to cut output.
Qatar’s benchmark edged up 0.4 per cent, adding to significant gains made last week. QNB Financial Services Research said in a note that Qatari companies including banks are forecast to get a boost from a deal to end Doha’s row with Gulf states.