World Week Ahead: Manufacturing reality check
Global manufacturing data and January's US jobs report will draw investors' focus in the coming days, along with more quarterly results including from Exxon Mobil today and General Motors on Wednesday.
On the weekend, China's manufacturing sector posted a disappointing January performance, adding to bets that more stimulus will be needed to bolster Asia's powerhouse. A report on the state of US factories due today will follow on the heels of Friday's US GDP statistics which showed the pace of growth in the world's biggest economy remains uneven.
Adding to investors' recent unease, US corporate results are flatlining-on already lowered expectations and there may be more of that this week.
Since January 21, seven of the 18 analysts with an earnings forecast for Exxon have revised estimates, according to StarMine, with forecasts dropping by an average of 5.5 percent, Reuters reported.
"Shell was the only company we expected to show profit growth this quarter, but it missed by quite a bit, which really raises concerns," Brian Youngberg, senior energy analyst at Edward Jones in St. Louis, told Reuters. "I wouldn't be surprised if estimates kept coming down."
On Thursday, Shell missed earnings estimates and said it would cut capital spending by US$15 billion over the next three years.
A day later, Chevron announced spending cuts and halted its share buyback program in a bid to offset the slump in oil prices.
The energy sector's swoon helped propel Wall Street lower last week. The Dow Jones Industrial Average sank 2.9 percent, the Standard & Poor's 500 Index shed 2.8 percent, while the Nasdaq Composite Index slid 2.6 percent. They also posted losses for the month, with the Dow shedding 3.6 percent.
Still, it wasn't all bad news. Last Friday, shares of Amazon soared 14 percent after the company reported a fourth-quarter profit. And Shake Shack, a small New York burger chain, saw its shares more than double on their trading debut.
Bonds gained, with US Treasuries recording the best start to the year since 1988, according to Bloomberg.
"I'll tell you what I think is the most important development-it's ECB quantitative easing," James Bullard, head of the Fed Bank of St. Louis, told Bloomberg Business. "That's driving the global bond rally."
Many eyes will scrutinise the latest US jobs data, with the ADP private employment report due on Wednesday, weekly jobless claims on Thursday, and the government's employment data on Friday.
Other US economic data released this week include the PMI and ISM manufacturing indices, and construction spending, due today; motor vehicle sales and factory orders, due Tuesday; PMI services index, and the ISM non-manufacturing index, due Wednesday; international trade, productivity and costs, due Wednesday; international trade, and productivity and costs, due Thursday; and consumer credit, due Friday.
Investors also will listen closely to US policy makers for further clues on the outlook for interest rates. The Fed's policy committee last week suggested it remains on track to lift borrowing costs this year.
Bullard speaks in Newark, Delaware on Tuesday, Cleveland Fed chief Loretta Mester talks Columbus, Ohio, on Wednesday, Boston Fed President Eric Rosengren speaks in Frankfurt, on Thursday, Atlanta Fed's Dennis Lockhart speaks in Naples, Florida, on Friday.
In Europe, stocks climbed 7.2 percent last month, underpinned by the European Central Bank's asset purchase plans to fuel growth and inflation. On Friday a report showed the annual inflation rate in the euro zone declined more than expected to minus 0.6 percent in January, down from minus 0.2 percent in December.