After slightly more robust than expected labor market data with unemployment falling to 3.5%, in the week ahead, US inflation numbers and Earnings report will open a new window in the stock markets, as we will see the effects of Fed policies on companies’ earnings. We should also follow the BoC meeting and FOMC March meeting minutes.
Tuesday, April 11: China’s Inflation number
Consumer Price Index for March is expected at 0.2% monthly, up from -0.5% in February, while the headline is seen at 1.9% annually, up from 1.0% in February. On the other hand, China’s producer price index is expected to decrease by -1.3%. Increasing inflation can lead to changes in China’s overly supportive policies, which may slow the growth of the Shanghai stock markets.
Wednesday, April 12: US inflation.
After a 0.5% increase in January and a 0.4% in February, the March consumer price index is expected to increase by another 0.3%, which means annual inflation should ease to 5.2% in March from 6.0% in February. However, the concern is about the Core number. The core CPI raise is estimated at 0.4% monthly, which will lift the annual inflation excluding food and energy prices, to 5.6%, up from 5.5% in February. These data show another elevated reading in the core CPI, indicating that the recent trend in inflation is little improved and will need more effort and a longer time to be controlled.
Wednesday, April 12: Bank of Canada meeting.
The Bank of Canada (BoC) holds its next monetary policy meeting this Wednesday. The consensus expectation is that the central bank of Canada holds its policy rate steady at 4.50% for the second meeting in a row. As inflation and economic growth slowed in recent months, BoC started its natural policy, and we do not expect any future rate hike anytime this year. However, cutting the rates is outside our outlook, as observing the effects of previous decisions takes time. So, the central bank will take time to lower its policy rate.
Wednesday, April 12: FOMC Minutes
The FOMC minutes of its March meeting will be out on Wednesday and should provide guidance on the pace for further rate hikes path and monetary policies.
Thursday, April 13: Australian labor market data
With openings in China, the Australian economy should improve in the coming months. The Australian employment report for March, especially a week after the RBA meeting, should provide more data about the state of the economy in early 2023. However, we are still waiting for weaker data for March, with the unemployment rate increasing to 3.6% from 3.5% in February. Therefore, given the pause in the RBA rate hike policy and monetary tightening, economic activities should rise in the following months and help the labor market.
Thursday, April 13: UK Economic data
On Thursday, UK GDP, Industrial Production, Manufacturing Production, and Trade balance will be out, all for February. With the expected 0.3% rise in industrial and manufacturing production, we expect GDP to rise by 0.2% in February. The main driver of the UK economy was the service sector; however, given the much lower energy prices compared with 2022, in the first months of this year, we had advanced economic data confirming the path of recovery, even if it is still slow. Therefore, given the high inflation, BoE, based on these positive data, can raise the rate by another 25 bps in its next meeting.
Friday, April 14: Huge US data
Friday will be a busy day in the US economic calendar, with too much data, including Industrial Production, Retail Sales, Export and Import prices, Business, and Retail Inventories, Michigan consumer sentiment and expectations, and speeches of several Fed members. The US Census Bureau will release the latest retail sales data, providing insight into consumer spending as the key driver of economic growth. Retail sales and industrial production can increase slightly in March, but we should talk more cautiously about the progress in the coming months. Overall we expect a slight improvement in numbers.
Earnings of the week
Q1 earnings reports release will start this week. Louis Vuitton ADR (LVMUY) will report on Wednesday, and Delta Air Lines (DAL) on Thursday. On Friday, we have the earnings call for UnitedHealth (UNH), JPMorgan (JPM), Wells Fargo&Co (WFC), and Citigroup (C).