Week In Review: Central Banks And Davos Dominate

This week, the focus among the financial community was on the United States corporate earnings, Monetary Policy decisions from Japan and ECB, and the ongoing meeting in Davos, Switzerland.

Corporate Earnings

This week, we received major earnings from top companies like Caterpillar, 3M, Starbucks, AbbVie, Haliburton, and Netflix. Among the top movers were Netflix, which reported a surge in new subscribers and Caterpillar, which reported exciting results, helped by the growth in global economy. The companies that disappointed were Starbucks, which beat analysts forecast but missed on margins, and General Electric, which reported weak earnings. The SEC also reported that it is investigating the company.

Monetary Policy Decisions

This week, Bank of Japan (BoJ) was the first to leave interest rates unchanged at negative 0.1 percent. They also left the ten year yield target at 0%. All this was in line with the expectations from analysts and financial watchers. This decision had a unanimous vote of 8-1.

The most important decision of the day was on the bank’s future guidance. In this, the bank said that it would continue with its quantitative easing program as long as possible to achieve the inflation target of 2 percent. On inflation, the bank expected the cote consumer prices to go up by 1.4 percent this year and 1.8% in 2019.

This week, the yen rose against the dollar by almost 1.50%.

On Thursday, the ECB completed its two-day meeting and left interest rates and deposit facility rate steady at 0 percent and negative 1.4 percent respectively. In the meeting and subsequent press conference, Draghi reaffirmed his commitment to continue with the quantitative easing program until or beyond September this year. This news pushed the euro to a three year high against the dollar.

Today, the Census Bureau released the core durable goods data which rose against 0.6% against the expected 0.5% while the Bureau of Economic Analysis released the QoQ GDP growth of 2.6% against the expected 3.0%.