Daily Market Outlook, January 24, 2023

Tech Rally on Wall Street Sees Nikkei Back Above 27K
The Nikkei (the only major Asian market open during the lunar holiday week) managed to shake off a third successive monthly decline in manufacturing data to reclaim the pivotal 27k level, as markets were buoyed by another impressive led Tech rally, Tesla gaining nearly 8% on the day, as the Tech heavy Nasdaq100 was up over 2% trading above 11800. European bourses are set to follow suit with futures suggesting a positive open.
In the UK data out this morning confirmed a year over year doubling in the public purse borrowing rising to £26.6Bln in December, however, it is thought that the 12 month deficit may still come in below forecasts, January;s data will be a key input to the final outcome as the January figure will contain HMRC tax revenues for the year. Datawise focus is on PMI releases, with both the manufacturing services data expected to remain in contractionary territory, printing below the pivotal 50 level, there is a chance that the services data may offer some modest growth driven by seasonal and world cup spending. The FTSE is currently the only European market currently trading in the red, driven by AstraZeneca and Glencore declines.
In the Eurozone PMI data is also expected to see meagre gains on the services side of the ledger vehicle manufacturing is thought to lag remaining sub 50 suggesting contraction in the sector continues, however, regional data just released by France saw a surprise gain in the manufacturing sector, printing 50.6. ECB Chief Lagarde is due to speak again today. With the BoE and FOMC moving into their respective black out periods, given the proximity of their policy announcements) Lagarde is expected to once again reiterate her hawkish stance.
The US data slate is also dominated by PMI data due later today, with both readings believed to remain in contractionary territory, key for US investors will be whether next weeks ISM data confirms the PMI prints as the ISM releases tend to be tracked more closely by US investors
Markets-wise, in the UK BHP have signed a partnership deal with Munduro Capital to assess the feasibility of copper mining in Serbia. The National Grid are offering discounts to customers who agree to use less electricity during peak consumption hours as a means to avoid black out periods during excessive consumption periods. After the close of US trading today tech stalwart Microsoft is set to announce earnings, given the recent rise in MSFT share price and the broader gains in the tech sector, investors will be looking for decent forward guidance to maintain the rally, any meaningful downgrades on outlook would see investors paring risk appetite ahead of Tesla earnings due tomorrow.