Here are the top five things you need to know in financial markets on Friday, October 14:
1. Yellen in the spotlight for clues on Fed rate hike
Federal Reserve (Fed) chair Janet Yellen could provide clues on her current stance for the future timing of the next rate hike later in the session.
Yellen is scheduled to deliver a speech on “Macroeconomic Research After the Crisis” at the Federal Reserve Bank of Boston’s Annual Research Conference on Friday at 1:30PM ET (17:30GMT), according to the Federal Reserve’s website (the Boston Fed’s agenda for the conference lists Yellen as giving a keynote address at 12:30PM ET).
The speech comes after the minutes from the September 20-21 Fed meeting revealed that several voting members of the policy committee judged a rate hike would be warranted "relatively soon" if the U.S. economy continued to strengthen.
Analysts widely expect the Fed to avoid making a move in November as the meeting comes less than a week ahead of the U.S. presidential elections.
Fed fund futures currently price in the chance of a rate hike in November at just 9.3%, according to Investing.com’s Fed Rate Monitor Tool.
Most bets pointed to a December move with the odds at 69.9%.
2. Consumer data to be closely followed
U.S. retail sales data will also be in the spotlight Friday, as investors attempt to gauge if the world's largest economy is strong enough to withstand an increase in borrowing costs before the end of the year.
The Commerce Department will publish data on September retail sales at 8:30AM ET (12:30GMT) Friday. The consensus forecast is that the report will show retail sales rose 0.6% last month, after falling 0.3% in August. Core sales are forecast to inch up 0.4%, after declining 0.1% a month earlier.
Additionally, at 10:00AM ET (14:00GMT), market participants will also eye the preliminary release of the Michigan consumer sentiment for the month of October. Consensus forecasts no change to September’s reading of 82.7.
3. JP Morgan kicks off banks’ Q3 earnings season
Though markets traditionally consider Alcoa’s earnings, out last Tuesday, to be the unofficial start of the third quarter (Q3) reporting season, JPMorgan Chase & Co (NYSE:JPM) has the double duty of being the first major financial institution and the first component of the Dow Jones to release earnings on Friday.
The world’s largest bank smashed estimates in the second quarter which may imply that the market has set the bar high for the July to September period.
Experts currently expect JP Morgan to report earnings-per-share (EPS) of $1.39, compared to $1.68 in the same period last year, while revenue is expected to increase to $23.8 billion from last year’s $23.5 billion.
After JP Morgan’s earnings release scheduled for 6:45AM ET (10:45GMT), both Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) will step up to the plate at 8:00AM ET (12:00GMT).
4. Chinese inflation data provides some relief
Just as China’s trade data dampened investor sentiment a day earlier, investors found some relief Friday from economic reports on prices that suggested that the world’s second largest economy could see some renewed hopes for demand prospects.
China reported that producer prices (PPI) rose 0.1% year-on-year, compared to a decline of 0.3% expected. That was the first positive growth since February 2012.
Additionally, the consumer price index (CPI) for September showed a gain of 0.7% month-on-month, well above the 0.3% pace seen and led by food prices, and a 1.9% increase year-on-year, faster than the 1.6% rise expected.
5. Global stocks mostly higher on China data
Global stocks moved higher on Friday, erasing some losses from the previous day, as the stronger-than-expected Chinese inflation data eased some concerns about the health of the world's second-biggest economy.
European stocks registered solid gains on Friday, as the Chinese data lifted market sentiment. At 5:55AM ET (9:55GMT), the benchmark Euro Stoxx 50 traded up 1.81%, while Germany’s DAX rose 1.62% and London’s FTSE 100 advanced 0.83%
Asian stocks closed mostly higher, with the Dow Jones Shanghai managing to recover from slight losses after the inflation data was released.
U.S. futures pointed to a rebound from Thursday’s slight losses while investors stateside awaited Yellen’s appearance and economic data. Specifically, the blue-chip Dow futures rose 0.35%, by 5:56AM ET (9:56GMT), S&P 500 futures added 0.36% and the Nasdaq 100 futures gained 0.33%.