Earnings Season Kicks Off, PMI Data and More
Earnings season is set to hit full stride in the coming week, with several big banks, including Goldman Sachs, Morgan Stanley, and Bank of America, releasing their results. Companies like Netflix, Tesla, IBM, and Johnson & Johnson will also announce their first-quarter earnings.
Banking heavyweights, including JPMorgan, Citigroup, and Wells Fargo, have already reported positive results, thanks to rising interest rates and easing fears of stress in the banking system. Despite the Refinitiv data released last Friday, which indicated a decline of 4.8% in the S&P 500 earnings for the first quarter from the year-ago period, market watchers expect stocks to hold up following the release of the earnings reports.
Federal Reserve Watch
The Federal Reserve policymakers will have a final chance to air their views before their traditional blackout period ahead of the next policy meeting, which is scheduled for May 3. The U.S. will also release data on existing home sales, a pair of regional manufacturing surveys, and the weekly report on initial jobless claims.
While most investors anticipate that the Fed will still hike rates by another 25 basis points, despite acknowledging the increased risk of a recession later this year after recent turmoil in the financial sector, the minutes of the central bank’s March meeting indicate the opposite.
PMI Data
The Eurozone, the U.S., and the U.K. are to release PMI (purchasing managers index) data on Friday, and market watchers will be on the lookout for signs of whether the recent turmoil in the banking sector is already affecting economic growth. The PMI data should show whether growth is slowing and how quickly.
Markets are betting on the Fed cutting rates by year-end, an expectation predicated on a major U.S. slowdown in the second half.
U.K. Data
The U.K. will release February employment data on Tuesday, followed by March inflation data a day later. This data will determine whether Bank of England officials decide to hike interest rates by another 25 basis points at their meeting next month.
Inflation unexpectedly rose to 10.4% in February, pushed up by higher prices for food, data that likely cemented the case for March’s rate hike. Economists expect inflation to return to single digits in March, but this would still be well above the rate of inflation seen in the rest of Europe and the U.S.
China Data
China is set to release a flurry of economic data on Tuesday, including reports on first-quarter gross domestic product, March retail sales, and industrial production. Market participants are hoping for more clarity on the uneven recovery in the world’s second-largest economy.
While Chinese exports are increasing, and credit growth is solid, inflation remains subdued as the consumer and industrial sectors struggle to recover in the wake of the hit from harsh pandemic-era restrictions.
In conclusion, the week ahead will be a busy one for investors and traders as earnings season hits full stride, and several big banks and companies release their results. The market will also watch for signs of whether the recent turmoil in the banking sector is already affecting economic growth. The Federal Reserve’s final chance to air their views before the next policy meeting, the release of U.K. and China economic data, and the PMI data are also among the top market trends to watch in the coming week.
