In today’s article we’ll have a look at some of the most important economic events of this week, which can have a significant impact on market movements.
Earnings reports US stock exchanges
A few Dow Jones and S&P companies are set to issue earnings reports for the first quarter of this year. Earnings are expected to grow by more than 18%, the highest increase in the last 7 years, as corporate performance improves after Donald Trump’s tax cuts. The three major US banks, JPMorgan Chase, Citigroup and Wells Fargo, will also announce earnings reports on Friday.
Company shares could also be heavily affected by Federal Reserve Governor Randal Quarles’ testimony before the House and Senate committees on Tuesday, and Thursday on banking regulations.
Despite yesterday’s slide, key rates (indices?) are still making strong gains, with the Dow Jones improving by 1.8% and the Standard & Poor’s 500 Index jumping 2%. Nasdaq also rose strongly, by 2.8%.
US Economic Data
Retail sales data for March will be released on Monday, and expectations are for an increase in retail sales by 0.4% over last month, after falling by 0.1% in February. Core sales are expected to increase by 0.2%, the same increase as in the previous month. Higher retail sales over time are associated with stronger economic growth, while weak sales point to a weaker economy. In addition to the retail sales report, during this week US data reports on building permits, housing starts, industrial production will also be published.
Market experts were also interested in comments by a number of Fed spokespersons this week, in order to get a future outlook on the monetary policy. The Federal Reserve raised interest rates last month and has maintained its expectation of higher interest rates this year. Analysts expect the council to raise interest rates in June for the second time and in December for the third time.
China will be the first major economy to announce growth data for the first quarter of this year, which is set to be released next Tuesday. The report is expected to show that the world’s second largest economy grew by 6.8% between January and March, for the third quarter in a row.
Meanwhile, investors will continue to assess whether a series of reciprocal reactions between the United States and China will end in negotiations or a comprehensive trade war between the world’s two largest economies.
Consumer prices in the UK
Analysts expect the annual consumer price index to remain steady at 2.7%, while core inflation is expected to rise slightly from 2.4% to 2.5%. Traders will also focus on employment data (Tuesday) and monthly retail sales (Thursday) for further indications about the continued impact of Britain’s exit from the EU.
The policy is also likely to be a focus, especially as Britain’s exit negotiations enter a key phase, almost a year after reaching the deadline for approval of a formal agreement. Although the UK economy is lagging behind the global recovery, it was better than the pessimistic expectations of the famous Brexit vote in 2016.