AI Risks, Climate and Deglobalisation Top WEF Agenda

Here are the week’s key events:

The annual World Economic Forum takes place in Davos this week. High on the agenda is the risk of AI to elections as well as climate change and the general trend for deglobalisation. Investors will pay attention to Taiwan’s election results, which are likely to be critical to US-China relations. On the data front, markets will be watching for US retail sales figures for the health of the consumer in the world’s largest economy. Meanwhile, earnings season continues on Wall Street with more banks to report.

Monday

The risk of artificial intelligence disrupting election outcomes topped the list of the biggest risks this year, according to a survey ahead of the WEF in Davos, which takes place this week. The World Economic Forum’s Global Risks Report 2024 highlights the kind of worries facing investors in a critical year for elections around the world, from India and the EU to the US and UK. Speaking of?which, investors will digest the results from Saturday’s election in Taiwan, which will be of crucial importance for US-China relations. Unusually it’s become a three-horse race – complicating the usual framing of the poll as a referendum on how close to work with neighbouring China. Meanwhile, Beijing is expected to make a decision on its key 1yr and 5yr loan prime rates. ?

Tuesday

Final German CPI inflation data is due, expected to confirm the rate reaccelerated in December. Germany’s ZEW economic sentiment report is also due. In the UK, sterling traders will watch the latest unemployment figures and wage data. Later on, we get Canada’s monthly CPI inflation and US Empire State Manufacturing Index. Trading updates are due from Experian and Ocado in the UK, whilst earnings season continues on Wall Street with the next two major banks to report.

Earnings: Goldman Sachs (GS), Morgan Stanley (MS)

Wednesday

The Asian session is packed with a deluge of Chinese economic data which will set the tone for the rest of the day. Industrial production, GDP, retail sales and fixed asset investment figures are set to be released. UK CPI inflation data will provide the backbone of the European session ahead of the release of final Eurozone inflation. The recent tick-up in inflation has cast doubt over just how quickly the ECB and other central banks will deliver rate cuts this year. The focus of the North American session is the latest US retail sales data for a snapshot of consumer health in the world’s largest economy.

Thursday

Australia’s employment report is on the docket ahead of a couple of central bank issues – BoE credit conditions survey and the ECB monetary policy meeting accounts. In the US, building permit data and the Philly Fed manufacturing index are the main highlights. The Philly Fed index dropped sharply in December as the current general activity index dropped to -10.5, from -5.9 in November, the 17th reading below zero in the past 19 months. Weekly crude oil and natural gas inventories are also due before a late outing for the Japanese national core CPI inflation report – recent deceleration in the Tokyo core CPI eased pressure on the Bank of Japan, sending the Nikkei and Topix to 34-year highs.

Earnings: Taiwan Semiconductor (TSM)

Friday

Watch the UoM inflation expectations survey, which has come down sharply of late. Year-ahead inflation expectations plunged from 4.5% in November to 3.1% in December, down to the lowest since March 2021.

Helping to underline this move the New York Fed’s median inflation expectations declined across all horizons, the one-year ahead falling to 3.0% from 3.4%, three-year from 3.0% to 2.6%, and also the lowest in three years. UK and Canadian retail sales reports are also due up, whilst the final earnings focus is on oilfield services giant?Schlumberger.

Earnings: SLB (SLB)