The highlights of a holiday-shortened week will be retail sales statistics and bank profits as investors wait for further information on the state of American consumers

Bank Earnings

Goldman Sachs and Charles Schwab are scheduled to release their bank profits on Tuesday and Wednesday, respectively, following a mixed bag of results from major lenders on Friday.

With evidence that the income boost from high interest rates is disappearing and some consumer loans are starting to sour, major U.S. banks reported reduced earnings in a turbulent fourth quarter marked by special charges and job losses.

Even still, the biggest lenders in the nation—JPMorgan, Wells Fargo, Bank of America, and Citigroup—struck a positive note about the economy, pointing out that even while consumer loan default rates started to drop back to pre-pandemic levels, consumers remained resilient.

US Economy

The U.S. retail sales report on Wednesday will be widely monitored for signs of consumer spending resilience in the face of higher interest rates, which is a key driver of economic development.

The Federal Reserve increased rates last year in an effort to contain inflation. The main concerns looming over markets, however, are whether the economy can avoid a recession and how quickly interest rates will be lowered this year, given that price hikes are moderating.

Following a 0.3% increase in November, retail sales are predicted to have increased by 0.4% in December.

China

On Wednesday, China is scheduled to reveal its full-year GDP statistics, which will demonstrate the extent to which the second-largest economy in the world achieved its official 2023 growth objective of 5%.

Geopolitical issues, cautious consumers, and a protracted housing crisis all suggest that China's economy is in for another rough year.

In other news, Germany is scheduled to reveal its full year GDP statistics on Monday. This data may indicate that the biggest country in the Eurozone experienced a mild recession in 2023.

On Wednesday, the day following the most recent jobless figures, the UK is scheduled to reveal the much anticipated inflation statistics. Inflation is anticipated to continue to be much higher than the Bank of England's 2% objective.

The BoE has indicated it aims to maintain interest rates high "for an extended period" to ensure the increase in inflation does not pose long-term issues in the economy, but investors are betting on a first rate decrease as soon as May.

Crude Oil

After gaining 1% on Friday, oil prices are poised to stay volatile this week as more oil tankers steered away from the Red Sea in response to American and British bombings on Houthi targets in Yemen following attacks on shipping by the Iran-backed group.

Brent was down 0.5% and U.S. crude was down 1.1% for the week. Fears over supply were stoked earlier in the week by abrupt increases in U.S. oil stocks and steep price cuts by Saudi Arabia.

(Sources: investing.com, reuters.com)