Ahead in Wall Street will see Big tech earnings and inflation data are expected this week, as U.S. stock rally appears to be stalling due to concerns about longer-term interest rate increases.
US Inflation Data
Investors are awaiting U.S. inflation data, including the personal consumption expenditures (PCE) price index, which is expected to remain elevated in March. Recent data suggests stalled inflation control, strong labor market data, Middle East geopolitical tensions, and Fed officials’ comments have prompted investors to reduce expectations on rate cuts.
PMI
Investors are monitoring PMI data from the Eurozone, the US, and the UK for signs of a return in inflation, particularly in the services sector, following a slowdown in growth and inflation.
Big tech earnings
Big tech earnings are expected to start in the coming days, following a week of significant losses for the S&P 500 and Dow Jones Industrial Average. Analysts predict a 2.9% year-on-year growth for the aggregate S&P 500 earnings. Four of the Magnificent Seven tech giants, Tesla, Meta, Microsoft, and Google, will report.
Oil prices
Oil prices slightly rose on Friday but fell by around 3% last week due to Iran downplaying Israel’s drone strike. The International Monetary Fund expects OPEC+ to increase oil output from July, while OPEC+ members, led by Saudi Arabia and Russia, have extended voluntary output cuts until June.
BOJ meeting
The BOJ is expected to release quarterly growth and inflation forecasts at its policy meeting on Friday, with Governor Kazuo Ueda stating that the central bank is likely to raise interest rates if inflation continues to rise and bond buying reduces. The yen has been declining since the BOJ’s decision.
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Investors await Tuesday’s U.S. inflation data to gauge Fed interest rate cuts, with February’s consumer price index expected to rise 0.4% after a faster increase of 0.3% in January.
Fed Chair Jerome Powell indicated that a rate cut may be appropriate this year, but he and his team are not yet prepared. Market observers will also be examining February’s retail sales data, which is expected to rebound 0.8% after a similar decrease a month earlier.
The economic calendar also features updates on industrial production, consumer sentiment and weekly data on initial jobless claims.
Fed officials will be entering the traditional blackout period ahead of their upcoming meeting next week.
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