Across this Global Week Ahead, U.S. tech mega-caps and large European banks report Q4 results.

Friday morning shows stock traders preliminary U.S. nonfarm jobs adds for JAN ‘24. A solid +162K is consensus. A seasonally strong +216K print for DEC closed out ’23.

Also on Friday morn, traders inspect the latest ISM manufacturing PMI for the U.S.A.

In terms of policy action, the U.S. Federal Reserve and the Bank of England (BoE) hold their first formal monetary policy meetings of ’24.

They grab the baton from the European Central Bank (ECB) and the Bank of Japan (BoJ).

In Asia, Mainland China's woes persist. Lots of PMIs arrive for that region.

Next are Reuters’ five world market themes, reordered for equity traders—

(1) Mega-Cap Tech and Growth Companies Supply Q4-23 Earnings Results

A heavy week of U.S. corporate results sees mega-cap tech and growth companies take center stage.

Reports are due from Apple (AAPL Quick QuoteAAPL - Free Report) , Microsoft (MSFT Quick QuoteMSFT - Free Report) , Alphabet (GOOGL Quick QuoteGOOGL - Free Report) , Amazon (AMZN Quick QuoteAMZN - Free Report) and Meta Platforms (META Quick QuoteMETA - Free Report) — five of the "Magnificent Seven" stocks that tallied eye-popping gains in 2023 and helped lift the S&P500 to a new record high in January for the first time in two years.

With the S&P500 officially in a bull market, the Magnificent Seven's results will be crucial in determining whether the index can maintain its momentum.

Overall, S&P500 companies are on track to post a +4.5% rise in Q4 earnings compared to the year-ago period, according to LSEG data.

Markets are focused on whether corporate earnings will indeed be rosier in 2024, as expected, with S&P500 companies estimated to increase earnings by over 10% this year.

(2) In Europe, Major Banks Report Earnings Results

European banks have been basking in a feeling they haven't had for years: rising profits and outperforming shares.

The highest rates in decades have seen lenders' net interest income — the amount they earn on loans minus deposit costs — soar. Shareholder payouts have hit record highs.

BBVA (BBVA Quick QuoteBBVA - Free Report) reports full-year results on Tuesday, Santander (SAN Quick QuoteSAN - Free Report) on Wednesday, with others to follow Thursday.

Investors will be watching out for signs the higher-rate boost has peaked — especially with the ECB expected to start cutting rates this year — but also gauge how fast banks' loan quality is deteriorating. Higher rates finally biting raises the question whether lenders can be as generous with buybacks and dividends.

Wednesday's Eurozone Q4 GDP numbers and Thursday's flash January inflation data should provide the banking sector and broader market of when those ECB cuts might arrive.

(3) On Wednesday, the 1st FOMC Meeting of 2024 Concludes

The Fed is expected to leave rates unchanged at its Jan. 30th - 31st meeting with markets hunting for clues on when the world's top central bank will start trimming borrowing costs after one of the most aggressive tightening cycles in decades.

Expectations for rate cuts as soon as March sparked an explosive 2023-end stock and bond rally. Investors still believe cuts are coming this year, but stronger-than-expected data and a policymaker pushback have sapped conviction for a first-quarter rate move.

Signs that Fed Chief Jerome Powell backs holding rates higher for slightly longer could give a tailwind to some of the moves the rates rethink has unleashed, such as a rebound in Treasury yields and the dollar.

Markets will watch the U.S. Treasury's quarterly refunding announcements, with overall funding totals due on Jan. 29 and maturity breakdowns on Jan. 31. Worries over U.S. government debt issuance contributed to an autumn bond rout.

And traders won't have much down time after the Fed meeting, with closely-watched US non-farm payrolls report out on Friday.

A Reuters poll forecasts the U.S. economy created 162,000 new jobs in January versus 216,000 the month before.

(4) On Thursday, a Bank of England (BoE) Monetary Policy Meeting

Sterling bulls may not have much further to run.

The Bank of England is expected to keep rates steady on Feb. 1st, but signal rates may not stay at their 16-year high for much longer.

The pound, up around 5% against the dollar in three months, has done well out of expectations the BoE might move more slowly on rate cuts than the Fed. That support looks shaky: Economists expect the BoE to drop its long-held warning that it will hike rates again if inflation rebounds.

Investors are also wary of the ruling Conservative party cutting taxes too generously in its March budget, ahead of an election expected at year’s end. They may have some headroom, but the prospect of entering unsustainable spending territory could dent sterling.

(5) This Week, Keep an Eye Out for PMIs from Major Asian Countries

The release of China's official purchasing managers' index (PMI) data on Wednesday could bolster the case that some serious repair work is needed on the world's second-biggest economy.

Cries for further stimulus to shore up a feeble post-pandemic recovery have thus far been broadly met with dribs-and-drabs rescue packages. Investors have fled a market that was once a broad must-have for global portfolios — sending Chinese equities to multi-year lows.

The central bank delivering a deep cut to bank reserves that will inject about $140 billion of cash into the banking system seemed to only bring temporary relief. While China narrowly surpassed last year's 5% growth target, analysts are skeptical that trend can be sustained.

PMI figures from elsewhere in the region — South Korea, Thailand and India — also scatter the data calendar.

Zacks #1 Rank (STRONG BUY) Stocks

A couple of major European firms made our #1 list.

I noted a major U.S. regional bank, with rising earnings estimates too.

(1) The Bank of New York Mellon (BK Quick QuoteBK - Free Report) : This is a $55 stock in the U.S. Major Regional Bank industry. It has a market cap of $42.3B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of A.

Image Source: Zacks Investment Research

Headquartered in New York and formed as a holding company for The Bank of New York Mellon, The Bank of New York Mellon Corp. (popularly known as BNY Mellon) is a financial services company that has been in business since 1784.

The company was incorporated on Jul 1, 2007, following the merger of The Bank of New York Company Inc. and Mellon Financial.

BNY Mellon operates in 35 countries and provides various products and services to individuals and institutions. Its global client base consists of financial institutions, corporations, government agencies, endowments and foundations, and high-net-worth individuals.

(2) Spotify Technology (SPOT Quick QuoteSPOT - Free Report) : This is a $214 stock in the Technology Services industry. It has a market cap of $41.2B. I see a Zacks Value score of D, a Zacks Growth score of A and a Zacks Momentum score of F.

Image Source: Zacks Investment Research

Spotify Technology S.A. provides music streaming services. The company offers commercial free music and ad-supported services to subscribers.

Spotify Technology S.A. is based in Sweden.

(3) Flutter Entertainment (PDYPY Quick QuotePDYPY - Free Report) : This is a $103 stock in the Book Publishing industry. It has a market cap of $36B. I see a Zacks Value score of F, a Zacks Growth score of C, and a Zacks Momentum score of C.

Flutter Entertainment PLC is involved in bookmaking business. Its brands portfolio consists of Betfair, Paddy Power, Sportsbet, TVG and FanDuel.

Flutter Entertainment PLC, formerly known as Paddy Power Betfair plc, is based in Dublin, Ireland.

Key Global Macro

On Monday, the Japanese household unemployment rate is 2.5%. We get an update, and 2.5% is still the consensus.

On Tuesday, seasonally adjusted Australian retail sales for DEC come out. In m/m terms, I see a +2% m/m growth rate sticks around.

Euro Area Q4 real GDP growth should be 0% y/y, in a preliminary reading. That makes the prior reading of 0.0% y/y unchanged. In q/q terms, look for a -0.1% m/m move.

The U.S. Case/Shiller Home Price Index (HPI) for NOV comes out. The prior reading was a +4.9% y/y increase.

U.S. JOLTS job openings for DEC come out. The prior reading was a strong 8.79M.

On Wednesday, the Mainland China NBS non-manufacturing PMI for JAN comes out. The prior reading was 50.4.

The Mainland China NBS manufacturing PMI for JAN should be 49.3. The prior reading was 49.

U.S. ADP private job additions should be +130K in JAN. The DEC number was +164K.

The FOMC monetary policy statement comes out. The policy rate of 5.25% to 5.5% is not expected to change, after this meeting breaks up.

On Thursday, there is an E.U. leader’s summit.

The Euro Area HCOB manufacturing PMI for JAN should be 46.6. The prior DEC reading was 46.6.

Core Euro Area HICP consumer inflation rate should be +3.2% y/y in JAN. The prior DEC print showed +3.4% y/y.

There is a Bank of England (BoE) monetary policy statement. No move from the 5.25% policy rate is expected.

The ISM manufacturing PMI for JAN should be 47.4. The prior reading was also 47.4.

On Friday, U.S. nonfarm payrolls for JAN should be +162K. The prior DEC reading was 216K. Given the shortened length of time to collect data, focus on the revised numbers, later on.

The U.S. household unemployment rate should remain unchanged at 3.7%.

U of Michigan consumer sentiment for JAN should be 78.8.

Conclusion

I conclude with Zacks Research Director Sheraz Mian’s key points, written down on Jan. 24th, 2024:

(1) The ‘Big 7 Tech Players’ started to report Q4-23 results, with more out this week.

• Zacks expects total Q4 earnings for this critical group to be up +38.3% from the same period last year, on +12.5% higher revenues.
• This would follow the group’s +54.2% higher earnings on +12.9% higher revenues in Q3-23.

(2) Total Q4 earnings for the 83 S&P500 members that have reported results are up +0.9% from the same period last year on +3.9% higher revenues.

• 78.3% are beating EPS estimates. 65.1% are beating revenue estimates.
• The Q4 earnings growth pace for these 83 index members is below what we had seen from this group of companies in other recent periods.
• The 78.3% EPS beats percentage is tracking in-line with the 20-quarter average of 78.2%.

(3) The revenue growth pace for this group of 83 S&P500 index members represents a deceleration, relative to what we had seen from the group in other recent periods.

• The 65.1% revenue beats percentage is below recent periods.
• It is below the 20-quarter avg. of 69.1% for this group of 83 index members too.

(4) Looking at Q4 as a whole, we can combine actual results that have come out, with estimates for the still-to-come companies.

• Total S&P500 index earnings are currently expected to be up +0.6% from the year-earlier level on +2.3% higher revenues.
• This would follow the +3.8% earnings growth in 2023 Q3 on +2.0% higher revenues.

Yes. The mega-cap tech companies are that dominant, to this Q4 earnings scene.

Their outlook on 2024 may matter the most to stock traders.

We shall see.

Happy trading and investing!

John Blank
Zacks Chief Equity Strategist and Economist