This week ahead || Apr 8th - Apr 12th 2024
Here's your news for the week ahead.
All eyes on inflation print as Q1 earnings season kicks off: What to know this week
Major U.S. stock indices suffered losses last week, with the Dow Jones Industrial Average dropping nearly 2.3%, marking its worst weekly performance in over a year. Looking ahead, investors await fresh inflation readings and the start of the first-quarter earnings season, with key companies like JPMorgan, Wells Fargo, BlackRock, Citi, and Delta Air Lines set to report. There's ongoing debate about Federal Reserve interest rate cuts, with some suggesting no cuts may occur this year if inflation stalls. The upcoming Consumer Price Index release for March will provide further insights. Additionally, analysts anticipate signs of earnings rotation, with megacap tech companies potentially experiencing slower growth compared to other sectors. Overall, market participants will closely monitor earnings reports and economic data to gauge market trajectory and potential shifts in sentiment.
Key inflation report may derail interest-rate cuts
Last week witnessed a rebound rally in stocks amid concerns over inflation and geopolitical tensions, with crude oil climbing and gold reaching record highs. Worries persist about potential escalation in the Middle East and the Ukraine-Russia conflict. This week, attention shifts to key inflation reports, with expectations of continued upward pressure. The Federal Reserve's stance on interest rates remains under scrutiny, with divergent views among policymakers. Meanwhile, the earnings season kicks off, with major financial institutions like JPMorgan, Wells Fargo, and BlackRock reporting. Investors are cautious amidst signs of increasing negative earnings guidance from S&P 500 companies. The week's performance saw mixed results across sectors, with energy stocks leading gains and technology giants experiencing declines. The market awaits further clarity from earnings reports and economic data releases.
US, China need 'tough' conversations, Yellen tells Chinese premier
U.S. Treasury Secretary Janet Yellen expressed concerns to Chinese Premier Li Qiang about China's excess industrial capacity, emphasizing the importance of open communication and mutual respect in managing bilateral relations. During their meeting, Li emphasized the need for partnership and constructive progress, acknowledging differences while aiming for stability in the relationship. Yellen highlighted the impact of China's over-production of clean energy goods on global markets, with a focus on electric vehicles and solar panels. Although discussions included differences of opinion, both sides engaged in a substantive dialogue without ideological pushback. Li urged the U.S. to avoid politicizing economic and trade issues, emphasizing a market-oriented approach to production capacity. Yellen's visit received a warm welcome, with social and cultural events reinforcing the improving ties between the two nations. Additionally, discussions in Guangzhou led to the launch of a dialogue on "balanced growth," aiming to address concerns about China's rapid expansion in sectors like electric vehicles. Despite challenges, China remains committed to advancing in high-tech areas, presenting both opportunities and competition for U.S. firms.
PIMCO trims 2024 Fed rate cut expectations to 2 after jobs report
Following stronger-than-expected U.S. job data for March, PIMCO has revised its forecast for Federal Reserve interest rate cuts this year from two to potentially just one, reflecting the economy's resilience to high interest rates. Mike Cudzil, a managing director at PIMCO, highlighted the market's shift in expectations, with traders now anticipating fewer rate cuts in 2024, aligning more closely with PIMCO's outlook. While some analysts still anticipate three rate cuts due to strong job growth, others, like Rick Rieder from BlackRock, emphasize the importance of monitoring inflation readings to gauge the Fed's rate path. Overall, Friday's data has nudged expectations slightly towards fewer rate cuts, emphasizing the evolving dynamics influencing monetary policy decisions.
