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The UK, US and the Eurozone in the week ahead

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  • Corporate earnings in focus
  • US Advance GDP released
  • The Fed’s preferred inflation measure

The first quarter corporate earnings season picks up a gear this week. Key updates include Alphabet, Microsoft, Meta Platforms, Apple, McDonald’s, and Amazon.

Monday 25th April

The week gets off to a quiet start in terms of data releases. Many Australian and New Zealand markets will be closed for Anzac Day. But the release of the Tokyo Core CPI (Consumer Price Index) will be in focus, particularly given the ongoing weakness of the Japanese yen. Italian markets will be affected by the observance of Liberation Day. As far as the rest of Europe is concerned, we will see the latest update on the German ifo Business Climate survey. Absent an upside blip at the beginning of this year, the survey has been trending lower since June 2021. From the UK we have CBI Industrial Order Expectations. The key earnings release is from Coca-Cola.

Tuesday 26th April

 We start the day with an update on the Japanese Unemployment Rate and more inflation data in the form of the Bank of Japan’s Core CPI. Following that comes the UK’s Public Sector Net Borrowing. This came in at +£12.3 billion in March which was well above the +£8.5 billion expected. But broadly the trend has been down since the multi-year pandemic induced high of £61.4 billion hit In May 2020. In the afternoon, the biggest data release will be US Durable Goods numbers. These will be followed by a clutch of second division data including the S&P/Case Shiller Composite -20 House Price Index, Consumer Confidence, New Home Sales, and Richmond Manufacturing Index. The key earnings updates come from 3M, Boeing, General Electric, Alphabet, General Motors, Microsoft, Mondelez and Visa.

Wednesday 27th April

We kick off with the release of inflation data from Australia. Last month the Consumer Price Index (CPI) rose 1.3% quarter-on-quarter. There is also an update on Australia’s Trimmed Mean CPI which excludes 30% of the most volatile goods and services. Last month this rose 1.0% quarter-on-quarter. While that sounds remarkably low, it is worth noting that this represents the fastest level of price rises in 13 years. Then we have some data from Germany with the release of the GfK Consumer Climate survey, Import Prices, and Retail Sales. The Consumer Climate survey plunged into negative territory in April 2020 and has struggled ever since. This indicates that there remains a strong degree of pessimism amongst the 2,000-odd consumers surveyed about personal and general economic conditions. Later on, we have the release of Credit Suisse Economic Expectations and UK CBI Realised Sales. From the US we have Wholesale Inventories, Pending Home Sales and weekly Crude Oil Inventories. Corporate earnings include ADP, CME Group, Kraft Heinz, Amgen, Ford Motor, Meta Platforms, PayPal, Pinterest, Qualcomm, and Spotify.

Thursday 28th April

Overnight we see the release of Japanese Preliminary Industrial Production and Retail Sales. Following these we get the Bank of Japan (BOJ) Outlook Report, Policy Rate, Monetary Policy Statement and Press Conference. These are seen as particularly important given the current context of currency weakness, with the Japanese yen trading at a twenty year low against the US dollar. This is partly a result of hawkishness from the US Federal Reserve, but also from efforts by the BOJ to control the yield curve on Japanese government bonds.

In contrast to the Fed, the BOJ continues to buy unlimited amounts of Japanese government bonds to keep a lid on the rise in Japanese 10-year yields, which were butting up against its 0.25% tolerance ceiling. Later, we have the Spanish Flash CPI and Unemployment Rate and the latest ECB Economic Bulletin. From the UK we have M4 money Supply, Mortgage Approvals and Net Lending to Individuals. From the US we have Advance GDP for the first quarter and weekly Unemployment Claims.

Thursday’s key US first quarter earnings reports come from Caterpillar, Eli Lilly, Keurig Dr Pepper, Mastercard, McDonald’s, Merck & Co, PepsiCo, Twitter, Amazon, Apple, Gilead Sciences, and Intel.

Friday 29th April

Japanese markets will be affected by Showa Day. From China we have updates on Manufacturing and Non-Manufacturing PMIs as well as the Caixin Manufacturing PMI. These will be of interest given ongoing lockdowns due to the re-emergence of the coronavirus, particularly across Shanghai. Then there is a ton of second division Eurozone data including French Flash GDP, Consumer Spending and Preliminary CPI. From the US we have Personal Income and Personal Spending, along with the Chicago PMI, Consumer Sentiment, and Inflation Expectations. But today’s key economic data release is the US Core PCE Price Index. This is the US Federal Reserve’s favourite inflation index. It tends to be less volatile than CPI and other measures. Due to the way it is calculated, it also tends to undershoot other measures which could be why the Fed prefers it. The last year-on-year update for Core PCE, which excludes food and energy was +5.4%. This compares with a Core CPI rate of +6.5% year-on-year, and a headline figure (including food and energy) of +8.5%. Key US earnings come from AbbVie, Aon, Bristol-Myers Squibb, Chevron, and Exxon Mobil.

David Morrison is an Analyst with Trade Nation. Trade Nation was set up with the specific remit to help customers realise their trading goals by changing the way they engage with the financial markets. As well as providing full transparency and making sure all customers get a fair deal, Trade Nation is fully regulated. This means customers can be confident they’re getting the trading experience they deserve. Visit www.tradenation.com to find out more

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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