Earnings season kicks into high gear in the coming week but concerns over persistently high inflation, a hawkish Federal Reserve and uncertainty arising out of the war in Ukraine look likely to continue to dominate market sentiment. Investors will be closely watching remarks on Thursday by Fed Chair Jerome Powell, in what is due to be his final public appearance ahead of the Fed’s May meeting. Meanwhile, oil prices will remain in the spotlight amid reports that the European Union is looking at a phased-in ban on Russian oil imports. Here’s what you need to know to start your week.
Powell Speech
Fed Chair Jerome Powell is to speak at the spring meeting of the International Monetary Fund on Thursday and later in the day, he is due to take part in a panel discussion on the global economy along with European Central Bank President Christine Lagarde and other central bank policymakers.
The Fed hiked rates by a quarter percentage point at its March meeting and since then has flagged another half-point move in May.
Many Wall Street analysts and investors believe the Fed has not moved quickly enough to combat high inflation and are now anticipating more aggressive rate hikes as the central bank catches up.
Data last week showed consumer prices rose 8.5% in March, the fastest annual increase since 1981.
Several other Fed officials are also scheduled to make appearances during the week, including St. Louis Fed President James Bullard, Chicago Fed President Charles Evans and San Francisco Fed President Mary Daly.
Earnings
With earnings season kicking into high gear, several Dow blue chips are due to report during the coming week, including healthcare giant Johnson & Johnson (NYSE:JNJ), staples stalwart Procter & Gamble (NYSE:PG), IBM (NYSE:IBM) and American Express (NYSE:AXP). Investors will also watch earnings from streaming giant Netflix (NASDAQ:NFLX) after the close on Tuesday and electric-car maker Tesla (NASDAQ:TSLA) on Wednesday, also after the close.
Bank earnings are set to continue Monday with both Bank of America (NYSE:BAC) and Bank of New York Mellon (NYSE:BK) reporting ahead of the open.
Signs that U.S. corporate earnings are set to be stronger than expected this year could bolster the case for other market sectors including banks, travel firms or other companies that benefit from a growing economy, or high-growth and technology names that led stocks higher for most of the last decade.
U.S. Economic Data
The U.S. economic calendar is relatively light in the coming week, featuring several updates on the housing market. Data on housing starts and building permits are due out on Tuesday, followed by an update on existing home sales on Wednesday.
The housing data will be closely watched with U.S. mortgage rates on the increase in response to higher market interest rates.
The weekly report on initial jobless claims will be released on Thursday, along with the Philadelphia Fed manufacturing index. Data on manufacturing and service sector activity is due out on Friday.
Oil Prices
Oil settled higher ahead of the long Easter weekend on Thursday with news that the EU might phase in a ban on Russian oil imports underpinning prices. The phased-in approach is designed to give Germany and other countries time to arrange alternative suppliers.
The proposed EU ban will be put up for debate only after the final round of the French presidential election on April 24 to avoid damaging President Emmanuel Macron’s chances of re-election.
The EU has already implemented five rounds of increasingly harsh sanctions against Russia since its invasion of Ukraine but is under pressure from its allies to do more. However, the bloc is ill-equipped to deal with the economic fallout from banning oil imports from what is its largest supplier.
Economic Data
China is to release data on first-quarter GDP on Monday, but investors will likely be more focused on March figures on retail sales, fixed-asset investment and industrial production for a more up-to-date view of how coronavirus lockdowns are impacting the world’s second-largest economy.
The Eurozone is to publish final inflation figures for March on Thursday, which are expected to confirm that consumer prices rose by 7.5% year-over-year, the fastest increase on record. Industrial production data for February on Wednesday is expected to show a small uptick.
The Eurozone and the U.K. are due to release PMI data on Friday which may begin to show some of the economic impact of the war in Ukraine. On the same day the U.K. is to publish March data on retail sales which are expected to show a second monthly decline.
