Steady currencies and share markets at record highs provide the market backdrop to a busy week ahead. The World Economic Forum gets underway, central banks in Japan and England will deliver interest rate decisions, PMIs in Europe will shed light on the economic outlook and investors have much to digest as the US earnings seasons gets into full swing.
Commodity markets provide a neat summation of current sentiment. Copper and crude oil continue to hold higher ground as trade fears recede. Despite the improving growth outlook, gold prices also remain elevated, suggesting a significant number of investors are unconvinced by the recent risk rally.
Neither the Bank of Japan nor the Bank of England are expecting to change policy at their respective meetings. The role of central banks in determining market moves is diminished by the proximity of the lower bound for conventional monetary policy. Increasing concerns about the ambiguous effects of unconventional policy may see commentary from both boards on the topic.
The US reporting season sees more than 40 majors report, despite the holiday shortened week. Proctor and Gamble, American Express, Netflix and IBM all face shareholders. Consumer stocks have provided the best news so far, while tech earnings are under the pressure. If these themes are confirmed this week there is potential for corrective action is US markets.
