In the week ahead, we provide you with all the necessary to build your strategy during the upcoming week with extra knowledge and up-to-date updates.
Investors will be watching corporates earnings, hoping that solid earnings will help the equity markets. Meanwhile, both the U.S. and the Eurozone are to release preliminary data on first-quarter growth along with what will be closely watched inflation readings.
In the U.S.
Data on U.S. economic growth and inflation will be under the spotlight this week due to concerns over whether the Fed can oversee a delicate plan for the economy as it acts aggressively to curb soaring inflation.
First-quarter growth preliminary data with GDP expected to slow sharply to 1.1% from its value in the last quarter in 2021 at 6.9%. Furthermore, the GDP data will be followed a day later by the personal consumption expenditures index, believed to be the Fed preferred meter of inflation.
Fed Chair Jerome Powell said last week “a half-point interest rate increase will be on the table” in the net meeting on May 3-4. Fed Chairman added that investors expecting a series of half-point hikes were “reacting appropriately, generally” to the Fed’s emerging fight against inflation.
The economic calendar also features durable goods orders, CB consumer confidence, new home sales, pending home sales, initial jobless claims, the Chicago PMI, and consumer sentiment.
U.S. Major in The Week Ahead:
|26-Apr||Core Durable Goods Orders m/m||0.50%||-0.60%|
|26-Apr||Durable Goods Orders m/m||1.00%||-2.10%|
|26-Apr||CB Consumer Confidence||108.5||107.2|
|28-Apr||Advance GDP q/q||1.00%||6.90%|
|28-Apr||Advance GDP Price Index q/q||7.30%||7.10%|
|29-Apr||Core PCE Price Index m/m||0.30%||0.40%|
|29-Apr||Revised UoM Consumer Sentiment||65.8||65.7|
The Eurozone is to publish data on first-quarter GDP amid preliminary data on consumer price inflation for April, which is expected to come in at 7.4%, almost four times higher than the European Central Bank’s 2% target. Last week ECB President Christine Lagarde said the ECB is likely to end its bond purchase scheme early in the third quarter and raise rates before the end of the year to combat rising inflation.
But the war in Ukraine is clouding the picture for the ECB resulting in high energy prices and disruptions to supply chains caused by the pandemic and aggravated by the war acting as a drag on growth.
European earnings get underway in earnest in the coming week and while companies are expected to have coped with higher inflation in the first quarter, investors will be keenly focused on their outlooks for the rest of the year.
In the French elections, market participants misjudged some presidential candidates, but a victory by Marine Le Pen would be a big surprise. Following last week’s TV debate, incumbent President Emmanuel Macron is at a 12-point lead in the polls. Many analysts have speculated that a Le Pen victory could trigger a constitutional crisis.
European Major in The Week Ahead:
|24-Apr||French Presidential Election|
|25-Apr||German IFO Business Climate||88.3||90.8|
|25-Apr||Belgian NBB Business Climate||0.2||0.4|
|27-Apr||German GfK Consumer Climate||-14.3||-15.5|
|28-Apr||German Prelim CPI m/m||0.60%||2.50%|
|28-Apr||Spanish Flash CPI y/y||9.10%||9.80%|
|28-Apr||Spanish Unemployment Rate||12.90%||13.30%|
|28-Apr||ECB Economic Bulletin|
|29-Apr||French Consumer Spending m/m||-0.10%||0.80%|
|29-Apr||French Flash GDP q/q||0.30%||0.70%|
|29-Apr||German Import Prices m/m||3.20%||1.30%|
|29-Apr||French Prelim CPI m/m||0.30%||1.40%|
|29-Apr||Spanish Flash GDP q/q||0.60%||2.20%|
|29-Apr||M3 Money Supply y/y||6.20%||6.30%|
|29-Apr||Italian Prelim GDP q/q||-0.30%||0.60%|
|29-Apr||German Prelim GDP q/q||0.20%||-0.30%|
|29-Apr||Private Loans y/y||4.50%||4.40%|
|29-Apr||CPI Flash Estimate y/y||7.50%||7.40%|
|29-Apr||Core CPI Flash Estimate y/y||3.10%||2.90%|
|29-Apr||Italian Prelim CPI m/m||0.60%||1.00%|
|29-Apr||Prelim Flash GDP q/q||0.30%||0.30%|
Friday’s disappointing UK Retail Sales and S&P Global Services PMI accentuated the BOE’s dilemma, knocking the pound below 1.2900, its lowest level since November 2020. UK Retail Sales dropped -1.4% over the month in March vs. -0.3% expected and -0.5% previous. Meanwhile, the Preliminary UK Services Business Activity Index for April slipped to 58.3 versus March’s 62.6 and 60.0 expected.
There is nothing significant, in terms of top-tier economic releases from the U.K. this week. But the effect of the U.S. releases should be closely followed.
U.K.’s Major in The Week Ahead:
|25-Apr||Rightmove HPI m/m||1.70%|
|25-Apr||CBI Industrial Order Expectations||24||26|
|26-Apr||Public Sector Net Borrowing||14.2B||12.3B|
|27-Apr||CBI Realized Sales||12||9|
|29-Apr||Nationwide HPI m/m||0.80%||1.10%|
|25-Apr||CAD||BOC Gov Macklem Speaks|
|28-Apr||JPY||BOJ Outlook Report|
|28-Apr||JPY||Monetary Policy Statement|
|28-Apr||JPY||BOJ Press Conference|
|29-Apr||CHF||SNB Chairman Jordan Speaks|
This past week, governments and market participants were trying to figure out the real effect of China’s zero-Covid policy and its extended lockdown of Shanghai. Global oil benchmark Brent and West Texas Intermediate, settled on Friday, logging a third weekly loss in four weeks, reacting to the Covid clampdown on Shanghai, as well as the prospect of weaker global growth and higher interest rates.
According to official government data released this week, China’s economy grew 4.8% year on year in January-March. But the IMF downgraded its growth forecasts for China in 2022.
As a result of the Shanghai lockdown, diesel and aviation fuel in April is expected to drop by 20% from a year earlier. That would be equivalent to a drop in crude oil consumption of 1.2 million barrels a day and will be the largest hit to demand since the lockdown more than two years ago.