This week will be extremely busy as we have an FOMC decision, the nonfarm payroll report, peak earnings season, all while Wall Street keeps an eye on the banking industry to see if any news stresses arise. The FOMC meeting is expected to have policymakers deliver one more quarter-point rate rise, possibly leaving the door open for one more. Disinflation trends need to show they are firmly entrenched for the Fed to take their foot off the tightening pedals.
The April nonfarm payroll report is expected to show hiring cooled from 236,000 to 175,000. The labor market is softening, but wages appear to be holding steady.
Peak earnings season is here. Wall Street will pay special attention to results from Adidas (OTC:ADDYY), Advanced Micro Devices (NASDAQ:AMD), American International Group (NYSE:AIG), Anheuser-Busch InBev, Apple (NASDAQ:AAPL), ConocoPhillips (NYSE:COP), Ford Motor (NYSE:F), HSBC Holdings (NYSE:HSBC), Infineon (OTC:IFNNY) Technologies, Intercontinental Exchange (NYSE:ICE), Kraft Heinz (NASDAQ:KHC), Marriott International (NASDAQ:MAR), Moderna (NASDAQ:MRNA), Motorola Solutions (NYSE:MSI), Pfizer (NYSE:PFE), Shell (LON:RDSa), Starbucks (NASDAQ:SBUX), Uber Technologies (NYSE:UBER), UniCredit, Volkswagen (ETR:VOWG_p), and Yum! Brands (NYSE:YUM)
Eurozone
The ECB is under less pressure to pause its tightening cycle than some of its peers. Being late to the party has its perks for once. The health of the European banking system, Credit Suisse aside, is also helpful in that, as was good fortune over the winter which enabled the bloc to not draw too heavily on gas stores. The end result is that the economy looks resilient and the ECB will continue hiking rates, albeit probably by only 25 basis points this time. That said, a nasty shock from the inflation data on Tuesday may change that.
UK
There’s very little from the UK next week barring a few tier three releases including final PMIs, mortgage approvals and house prices. Policywatchers will also pay attention to the BOE’s Decision Maker Panel Survey.
Russia
There’s a few economic releases of note next week including unemployment and the manufacturing and services PMIs.
South Africa
Another quiet week with the whole economy PMI the only notable release.
Turkey
Inflation data in the middle of next week will tell us how much progress has been made in bringing price increases back to more reasonable levels. It’s currently far from that and probably will be for some time, at least until after the election.
Switzerland
Inflation and unemployment data next week will be in focus, the former in particular, given the SNB determination to hike despite the data not being particularly high.
China
A quieter week as China’s stock market will be closed for the Labour Day Golden Week holiday from Monday, 1 May to Wednesday, 3 May. China’s top policy-making body, the Politburo concluded its April meeting last Friday that put emphasis on the role of domestic demand that plays a key role in economic recovery. It added that proactive fiscal policy should be stepped up and work alongside monetary policy to boost the current insufficient levels of demand.
The action comes on Sunday, 30 April for the release of the official NBS Manufacturing and Non-Manufacturing PMI for April. Forecasts are expecting a continuation of manufacturing growth with a slight dip to 51.4 from 51.9 printed in March; as for the non-manufacturing activities where it is expected a slight increase to 58.3 in April from 58.2 in March, and if it turns out as expected, it will be the fourth consecutive month of expansion.
On Thursday, 4 May, the attention will turn to the Caixin Manufacturing PMI for April which consists of smaller SME Chinese manufacturers; forecasts are expecting an expansion to 50.4 from 50.0 recorded in March where it reversed down from its 8-month peak of 51.6 printed in February.
Rounding up the week on Friday is the release of April’s Caixin Services PMI where forecasts are coming in at 58.0, slightly above March’s 57.8. If the estimates turn out as expected, it will mark the fifth consecutive month of growth expansion in the services sector.
Given the latest stance of the Politburo meeting and if April PMIs come in worse than expected, China’s PBOC may be forced to adopt a more expansionary policy soon as it has kept its key policy interest rates unchanged for April.
India
April’s manufacturing PMI is expected to come in at 55.8, a slight dip in growth from a 3-month high of 56.4 recorded in April. Next up, Services PMI for April will be released on Wednesday where consensus estimates are expecting another month of expansion at 57.0, almost unchanged from March’s 57.8.
Australia
A couple of key data to note, especially the RBA monetary policy decision outcome on Tuesday. The latest Q1 core inflation came in softer than expected which increased the odds of a second consecutive pause on its key policy interest rate at 3.60%.
Retail sales for March will be released on Wednesday and the forecast is expected to show an improvement of a 1% month-on-month growth from 0.2% recorded in February.
Lastly, the trade balance for March is expected to come in at A$12.75 billion, a reduction from A$13.87 billion recorded in February.
New Zealand
The key data to focus on will be Wednesday’s employment data for Q1; the unemployment rate is expected to come in slightly higher at 3.5% from 3.4% printed in Q4 22. In addition, the consensus estimates for the participation rate will be unchanged at 71.7%, a record high.
Lastly, the Labour Cost Index is expected to show an increase of 4.6% year-on-year in Q1 from the previous quarter of 4.3%; if it turns out as expected, it will be the highest growth on record, putting upside pressure on wages.
Japan
A quiet week except for Monday’s final reading of the manufacturing PMI where the earlier preliminary data came in at 49.5, still in a contraction mode but slightly higher than March’s final print of 49.2.
In addition, consumer confidence for April will also be released on Monday, it has shown a remarkable improvement in the previous month where it rose to 33.9 in March, its highest reading since May 2022.
Singapore
The key focus will be on April’s retail sales out on Friday; after a double-digit jump in year-on-year growth to 12.7% in March from a sharp recovery of February’s -0.8% drop, consensus estimates are expecting April’s growth to moderate to 2% year-on-year.
Energy
It looks like OPEC+ made the right call when they stunned markets with a surprise output cut. The short-term crude demand outlook has not been getting any favors from central banks and this week will likely see a couple big ones, the Fed and ECB will deliver more tightening that will dampen short-term growth prospects. Oil should see some support from the $70 level given the lack of investment in new wells and given how much of the bad news for the US has been priced in and as China’s disappointing COVID reopening should improve going forward.
We’ve heard from the US oil giants, Exxon (NYSE:XOM) and Chevron (NYSE:CVX) were constructive with the outlook, and now it is BP (NYSE:BP) and Shell’s turn. In addition to some major energy earnings reports, traders will pay close attention to the global manufacturing PMI readings.
Gold
Gold remains a choppy trade after another week filled with renewed banking turmoil, impressive mega-cap tech earnings and mixed economic data that supports more Fed tightening. The upcoming week will have much attention falling on the Fed and ECB rate decisions, but also the nonfarm payroll report. If the US economy continues to show too much resilience, June rate hike odds could grow and that should weigh on gold prices, possibly keeping it from making any serious moves above the $2000 level. .
Crypto
There is a lot of noise in the cryptoverse as investors await clarity over US regulation. The Europeans have been able to create MiCA, the beginnings of legal clarity that provides some rules regarding custody, operations, platforms, advice and portfolio management. Global regulation will be a lengthy process, but seeing some positive developments in the US will be key for investors. Cryptos have been getting a boost as banking crisis jitters remain and as the US economy slows and supports the argument that Fed is nearing the end of its tightening cycle.
For a bullish move higher, Bitcoin needs a major catalyst, perhaps a breakthrough on regulation or a settlement with one of the pending crypto legal cases. Investors will likely remain hesitant to put more money at work with Bitcoin around the $30,000 level unless the fundamentals dramatically change here. The risks are still to the downside for Bitcoin, but major support should come from the $27,000 level.
See this week's economic calendar