4 factors are in the spotlight and can shock the markets between April 8th and 12th. What is about to happen that will have such an impact on the stock markets?
The week from 8 to 12 April can be explosive for the markets and there are 4 reasons.
From the ECB meeting to China’s macro data to the quarterly reports of large US banks and the observation of the price of oil, the factors ready to upset the world stock markets are different.
In a global context made uncertain by the two ongoing wars, by the trend of volatile inflation, and by the Fed’s caution in predicting the first rate cut, investors are carefully observing every event capable of pushing up or down stocks, bonds, and currencies.
4 events are ready to upset the price lists.
1. ECB meeting
The European Central Bank will meet on Thursday 11 April for what will probably be the last meeting without surprises before starting to cut interest rates.
Traders see a near 100% chance of a 25 basis point decline in June, so the green light is critical to support market sentiment. A flurry of politicians have explicitly pointed to June as the date of the first move. Even Austria’s hawkish governor, Robert Holzmann, is not opposed.
Therefore, the ECB will likely signal an imminent rate cut. The question is how explicit policymakers will be about June, given that they want to review first-quarter wage growth data that will be released in May. The spotlight will be on Lagarde’s press conference.
A more aggressive tone from the governor and a delay in the start of the cuts could push bond yields and the euro, but depress stock sentiment and eurozone growth estimates.
2. Macro data on China
China’s economy appears to be offering more promising signs of recovery, and that has helped keep stocks near multi-year highs lately.
The Shanghai Composite recently recorded its biggest rally in a month after data showed the fastest expansion in the manufacturing sector in more than a year. This was followed by even more promising numbers on the acceleration in services activity, suggesting a more likely consumer push.
A host of new indicators are about to be revealed that could support or subvert that optimism: consumer and producer price indexes on Thursday and trade data on Friday.
These numbers will be proof of consumer appetite. Meanwhile, the consumer price index will be key as the first increase in six months in the previous data set is what helped Chinese stocks hit post-November highs, although the data was potentially distorted by the holidays of the Lunar New Year.
3. Quarterly reports from US banks
Quarterly reports from major banks will soon kick off earnings season.
After strong fourth-quarter 2023 results, S&P 500 companies are expected to see a 5% year-over-year increase in first-quarter earnings, according to LSEG IBES.
Investors are counting on robust corporate profits this year to support rising valuations as the stock market has risen to record highs. The S&P 500 price-to-earnings ratio is at its highest level in two years.
JPMorgan Chase, Citigroup and Wells Fargo will all release results on April 12. Delta Air Lines and BlackRock are among other major companies that will provide quarterly updates in the coming days.
4. Oil price
Growing geopolitical turmoil and supply disruptions in several production hotspots are pushing oil prices toward $90 a barrel for the first time in months. This can easily and potentially translate into an upward push in inflation.
Central banks tend to focus on so-called core measures of inflation that exclude energy and food prices. However, businesses can’t eliminate the price of crude oil from the equation. And speculation that the Fed may cut rates less than its peers has pushed the dollar higher almost everywhere this year.
This in turn has undermined the purchasing power of large buyers in China, Japan, India, and South Korea, driving up their energy import bills.
All this complicates life for the monetary authorities of those countries, who have intervened or have threatened to intervene, to support their currencies and avoid a sort of vicious cycle of renewed inflation.
Original article published on Money.it Italy 2024-04-06 12:48:55. Original title: Questi 4 eventi stanno per scuotere i mercati
