Market Outlook for Next Week (US):

The upcoming week features key economic data and events that could influence market sentiment and asset prices. Below are the highlights and their potential market implications:
Key Economic Events & Data Releases

Flash PMIs for January (Tuesday, January 23, 2025)
Time: 9:45 AM EST
Expected Data:

Manufacturing PMI: 49.8 (Previous: 49.5)
Services PMI: 51.3 (Previous: 50.9)

If the Manufacturing PMI remains below 50, it will confirm ongoing contraction in the sector. However, an improvement in Services PMI could suggest resilience in the broader economy. Positive surprises in both PMIs may lead to a rally in equities, particularly in cyclical sectors, while disappointing data could weigh on sentiment.

Initial Jobless Claims (Thursday, January 25, 2025)
Time: 8:30 AM EST
Expected Data: Approximately 215,000 (Previous: 212,000)

A low reading would signal continued strength in the labor market, likely reinforcing expectations for the Federal Reserve to maintain higher interest rates for an extended period. This could put downward pressure on equities while supporting bond yields and the US dollar. Conversely, a higher-than-expected figure may ease rate hike fears and support risk assets.

Q4 2024 GDP Advance Estimate (Thursday, January 25, 2025)
Time: 8:30 AM EST
Expected Growth: 2.2% annualized (Previous: 2.5%)

This release will provide insight into the economy’s performance during the final quarter of 2024. A weaker-than-expected GDP figure could fuel concerns about slowing growth and lead to a rally in bonds, while stronger growth may boost risk appetite but could reignite concerns about further Federal Reserve tightening.

Core PCE Price Index (Friday, January 26, 2025)
Time: 8:30 AM EST
Expected Data: +0.2% month-over-month, 3.6% year-over-year (Previous: 3.8%)

As the Federal Reserve’s preferred measure of inflation, this report will be closely monitored. A decline in the year-over-year figure may reduce pressure on the Fed to hike rates further, which could support equity markets and weaken the US dollar. Conversely, persistently high inflation could trigger renewed concerns about policy tightening, potentially weighing on equities.

Consumer Sentiment Index – Final Reading for January (Friday, January 26, 2025)
Time: 10:00 AM EST
Expected Data: 64.8 (Previous: 64.6 preliminary)

Consumer sentiment is a key indicator of household confidence and spending outlooks. An improvement could support consumer-related stocks, while any downward revision might weigh on the market.
Overall Market Implications

Equity markets will likely remain sensitive to any data hinting at changes in economic growth, inflation, or labor market conditions. Positive surprises in growth or inflation cooling could drive risk-on sentiment, while signs of a slowing economy or stubborn inflation might increase market volatility. Bond markets may see notable movement depending on the GDP and Core PCE figures, while the US dollar’s trajectory will largely depend on labor market and inflation data.

Investors should prepare for potential volatility across sectors, particularly in interest rate-sensitive areas like technology and real estate.