Investing.com - Here are the top five things you need to know in financial markets on Friday, January 13:
1. China posts worst fall in exports since 2009
China reported a year-on-year decline in exports of 6.1% in December, taking its total decline in 2016 to a drop of 7.7%.
That was its second annual decline in a row and the worst since the depths of the global crisis in 2009.
Even though imports managed to rise 3.1% in December, beating expectations for a gain of 2.7%, they still fell 5.5% in 2016.
Investors are further concerned over policy decisions when President-elect Donald Trump takes office on January 20 and whether he will follow up on promises to put high tariffs on Chinese imports in the U.S.
2. Banks kick off quarterly earnings reporting season
Friday will see the fourth quarter earnings season kick off in earnest with the first reports from components of the Dow Jones.
Both Bank of America (NYSE:BAC) and JP Morgan (NYSE:JPM) are among financial institutions that also include Wells Fargo (NYSE:WFC) and PNC Financial (NYSE:PNC) releasing results before the bell on Friday.
Analysts expect fourth-quarter earnings will show an increase of 6.1% from a year ago. The S&P financial sector earnings are expected to have the biggest gains, with earnings up 15.7%.
3. Economic data to focus on American consumer
On Friday’s economic front, markets will take measure of the state of the U.S. consumer.
The Commerce Department will publish data on December retail sales at 8:30AM ET (13:30GMT). The consensus forecast is that the report will show retail sales rose 0.7% last month, after gaining 0.1% in November. Core sales are forecast to inch up 0.5%, after rising 0.2% a month earlier.
At 10:00AM (GMT 15:00GMT), the University of Michigan will release its reading on consumer sentiment for January, with optimism expected to hit a fresh 12-year high.
Apart from the retail sector, investors will also digest data on producer prices for December and November business inventories.
4. Oil slumps on doubts over cut compliance
Oil prices dropped by around 1% on Friday, as OPEC sources told Reuters that major oil producers were unlikely to fully implement their promised cuts.
According to the report, delegates said that 80% compliance would be good while as low as 50% would be acceptable.
Investors were also cautious as they waited for more signs of the ramp up in U.S. drilling activity in the weekly report from Baker Hughes.
According to the oilfield services provider, data last week showed that the number of rigs drilling for oil in the U.S. increased by 4 to 529, the tenth straight weekly rise and a level not seen in more than a year.
U.S. crude oil futures fell 1.21% to $52.37 at 5:55AM ET (10:55GMT), while Brent oil traded down 1.20% to $55.34
5. Yellen upbeat on U.S. economy
After Thursday’s market close, Federal Reserve (Fed) Janet Yellen gave a generally upbeat reading of the U.S. economy.
Although her prepared remarks to U.S. educators avoided the economy and monetary policy, Yellen responded in the Q&A that the U.S. central bank was focusing on low unemployment and stable inflation.
She showed optimism over the economy “doing quite well” with the labor market generally strong and wage increases picking up pace.
Yellen admitted that inflation was below the 2% target but pointed out that it had risen from very low level and was getting close.
Markets were still looking for the first rate hike in June while doubting the Fed’s call for three hikes this year, pricing in odds of only 32.3%, according to Investing.com’s Fed Rate Monitor Tool.