Ahead in Wall Street will see increased focus on US inflation data, earnings season, European Central Bank meeting, and geopolitical risks supporting oil prices, following Friday’s job report.
US Inflation Data
The US is set to release consumer price inflation figures for March, with economists expecting core inflation to slow to 3.7% year-over-year from 3.8% in the previous month.
Producer prices are expected to show a more moderate increase. The data comes after the US economy added more jobs than expected last month and wages rose steadily, suggesting inflation may be slow to moderate.
Fed Minutes
The Federal Reserve (Fed) is set to release its March meeting minutes, which showed an expectation of three rate cuts for this year, but with less conviction than last year’s forecast. Markets are now pricing in two rate cuts, down from three previously. Fed Governor Michelle Bowman has downplayed the urgency of cutting rates.
Major earnings
Major banks are set to release quarterly reports on Friday, marking the start of earnings season. Investors are relying on strong corporate profits to support rising valuations as the stock market rallies to record highs. The S&P 500 is up over 9% year-to-date, and companies are expected to deliver strong results. Investors will also be interested in companies’ views on the economy and inflation.
JPMorgan Chase (NYSE:JPM), Citigroup Inc (NYSE:C) and Wells Fargo (NYSE:WFC) all report results on Friday. Delta Air Lines (NYSE:DAL) and BlackRock (NYSE:BLK) are among other big names set to provide quarterly updates during the week.
Oil prices
Oil prices rose for a second week, driven by geopolitical tensions in the Middle East, supply tightening concerns, and demand growth expectations. Crude oil reached its highest levels since October, with U.S. crude futures rising 32 cents to $86.91 a barrel and Brent up 52 cents to $91.17 a barrel. Markets are monitoring potential conflicts between Iran and Israel, which could further tighten supplies.
ECB meeting
The ECB is expected to hold rates steady before a 25 basis-point rate cut in June. Markets predict a 25 basis-point cut, and President Christine Lagarde’s comments will be closely watched. Policymakers have pointed June as the first move, and the Eurozone’s unexpected fall to 2.4% in March supports expectations for a rate cut. Central bankers in Canada, New Zealand, Singapore, and South Korea will also meet.
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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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