Wall Street watches January jobs data and CPI… Shanghai stocks keep an eye on Lunar New Year spending [Weekly outlook for New York & Shanghai markets]

Korea Economic Daily

Summary

New York stocks are expected to take direction from the releases of the January U.S. nonfarm payrolls report and the Consumer Price Index (CPI).
Wall Street is forecasting a January unemployment rate of 4.4%, 70,000 net new nonfarm jobs, and a 0.3% month-on-month rise in core CPI.
Shanghai stocks are watching whether January CPI·PPI data and a Lunar New Year rebound in consumption will ease deflation worries and provide additional upside momentum.

Feb. 11: January U.S. nonfarm payrolls report

Feb. 13: January U.S. Consumer Price Index (CPI)

U.S. equities (Feb. 9–13) face a heavy slate of key economic releases this week. The January U.S. nonfarm payrolls report is due Feb. 11, followed by the January U.S. Consumer Price Index (CPI) on Feb. 13.

The labor market is in the spotlight, after a string of indicators released last week pointed to deterioration. According to a layoffs report released on Feb. 5 by Challenger, Gray & Christmas (CG&C), U.S. companies’ planned job cuts in January totaled 108,435— the highest since 2009. That marks a 205% jump from the prior month and a 118% surge from a year earlier. Wall Street is forecasting a January unemployment rate of 4.4% and 70,000 net new nonfarm jobs. If the unemployment rate comes in above expectations, concerns about labor-market stress could spread quickly. Wall Street also pegs the month-on-month increase in both headline CPI and core CPI at 0.3%. Markets currently expect the Fed to cut its policy rate twice this year, by 0.25% point each time.

After returning from the Lunar New Year holiday, Shanghai equities are expected to take their cue from major January economic data due this week. The Shanghai Composite Index staged a rally last month, breaking above 4,000 for the first time in a decade, but recent profit-taking has made it urgent to shore up support levels.

The key releases that could set the tone this week are the January Consumer Price Index (CPI) and Producer Price Index (PPI), scheduled for Feb. 10. Locally, January CPI is expected to rise around 0.8% year on year. If a strong rebound in spending during the Lunar New Year period is confirmed, it could help dispel deflation fears that have weighed on the market and provide additional upside momentum. PPI, however, is expected to remain in negative territory, suggesting pressure on corporate earnings will persist.

New York=Park Shin-young, correspondent nyusos@hankyung.com