Daily Market Outlook, January 13, 2023

Markets Poised To Post Weekly Back To Back Gains For The Start of 2023
Asian Equities are set to close out the week with a positive tone, following a whipsaw session on Wall Street, as investors digested US inflation data, markets are coalescing around the view that peak inflation is now firmly in the rearview mirror, as such investors hope that US interest rates are also close to peaking. US inflation as expected, posted a sixth month of declines, this has led markets to favour a 25bps rate move at the next FOMC meeting, which inturn has supported US equities with the benchmark SP500 closing the day with modest gains, and now heading for a potential second week of positive returns for the new year..
Risk sentiment has been further supported this morning, with UK GDP data surprising to the upside, posting a 0.1% gain in November, under the hood construction activity is subdued, with industrial production remaining depressed, however, the services sector displayed unexpected buoyancy, the data bucks the trend of declines, suggesting that unless December numbers post a meaningful drop, economist projections for another quarter of negative GDP data in the UK may be misguided.
Aside from the UK GDP the data slate is somewhat sparse ahead of the US trading session, focus today will be on the University of Michigan consumer sentiment survey, with consumer sentiment lifting in December given the hope that inflation has peaked, further confirmation from yesterday’s CPI data combined with lower fuel prices stateside, leads market watchers to expect another lift in consumer appetite in January, investors will also look for additional declines in inflation expectations to cement the peak inflation narrative.
Investors will eye remarks from a host of Fed speakers today, prior positive market reactions to the reduction in inflation data, have been followed by Fed speakers reaffirming their hawkish stance and restating their alliance around a rate story of ‘higher for longer’, if this pattern is repeated today, this could weigh on risk appetite into the weeknd, bulls will be hoping that today’s officials Williams and Kashkari, follow Philly Fed President Harker, who yesterday leaned towards a slower rate path favouring a 25bps move at the next meeting.
Markets-wise, the US earnings season kicks off in earnest today, with major financial franchises set to report, JPMorgan are due to announce before the bell and will likely set the tone for US trading, followed by Blackrock, BNY Mellon, Bank of America, Wells Fargo and Citi. Markets will be buoyed into the weekend as long as earnings meet expectations, any major misses from the marquee names could derail risk sentiment and lead to repricing of risk assets before the close of trading for the week.