After a solid start to the week, US sharemarkets closed lower after the annual inflation rate in the US rose faster than expected and media reports suggested Russia could invade Ukraine as early as this week.
The Dow Jones fell 1 per cent, the S&P 500 closed 1.8 per cent lower, and the tech-heavy Nasdaq closed 3 per cent lower for the week.
Despite falls on Wall Street, the Australian sharemarket, the ASX200, closed 1.4 per cent higher at 7217, supported by a good start to the local earnings season and as higher bond yields supported the financial and resources sector.
Here are the top five things to watch in markets this week.
1. Russia-Ukraine tensions
Markets will be paying close attention to the Ukraine-Russia border amid media reports that Russia could invade Ukraine as early as this week.
“There is a credible prospect that a Russian military action would take place even before the end of the Olympics,” US national security adviser Jake Sullivan told reporters.
2. Australian employment data
After a strong rebound over the past two months of 2021, the Omicron outbreak in January is expected to cause a 15,000 fall in employment as economic activity softened.
A decline in the participation rate is expected to see the unemployment rate fall to a new cycle low of 4.1 per cent.
3. US Q4 2021 earnings results continue
Inflation concerns and European political tensions overshadowed strong earnings reports from companies including Uber and Walt Disney last week.
This week, earnings season continues with reports from companies including Nvidia, Cisco, Walmart, Applied Materials, Roku and DraftKings.
Analysts expect Nvdia to report revenues of $7.42 billion and adjusted earnings per share of $1.23 per share versus 78c per share last year.
4. Australian 1H2022 Earnings Season
The Australian 1H2022 earnings season picks up speed this week, with reports from companies including BHP Group Ltd (BHP), Fortescue Metals Group (FMG), as well as JB Hi-Fi Ltd (JBH) and CSL Limited (CSL).
The market consensus is for BHP to report earnings of $US9.8 billion ($13.8 billion) for 1H2022, with an interim dividend payout of $US1.75 ($2.46) per share.
5. Will crude oil reach $100 per barrel?
Crude oil has rallied for the past eight weeks closing on Friday at $93.10 per barrel.
Behind the rally: Buoyant demand, strained supply as OPEC+ again missed targets in January, and a possible Russian invasion of Ukraine.
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