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Economic Calendar - Top 5 Things to Watch This Week

EconomyApr 22, 2018 05:42AM ET
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© Reuters. Top 5 things to watch this week in financial markets - The coming week marks the busiest one of the first-quarter earnings season on Wall Street, with many of the big-name U.S. technology stocks, such as Facebook, Amazon and Google, set to report in the days ahead.

Investors also have their eyes on interest rates to see if the U.S. 10-year Treasury yield will finally hit the 3%-mark. If yields continue to breakout, that will certainly start weighing on equities.

Meanwhile, attention will shift back to monetary policy this week, with meetings from both the European Central Bank and the Bank of Japan on the agenda, though it's highly unlikely either will rock the boat policy-wise.

GDP reports will also be in focus, with preliminary readings for the first three months of 2018 expected out of the United States and the United Kingdom.

Geopolitics and trade talk will also likely keep investors on their toes this week.

Ahead of the coming week, has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. U.S. Tech Companies Highlight Busy Week Of Earnings

This week will be the busiest week of the first-quarter earnings season, with more than a third of the S&P 500 set to report.

Most of the focus will be on the FAANG group of stocks.

After the bell on Monday, Google parent Alphabet (NASDAQ:GOOGL) is expected by analysts on average to report a 22% increase in revenue to $30.3 billion, with net income rising 21%, equivalent to $9.28 per share on a non-GAAP basis, according to Thomson Reuters data.

Analysts expect Facebook (NASDAQ:FB) to post a 42% surge in quarterly revenue, to $11.4 billion, when it reports late on Wednesday. Its stock has lost 10% since the revelations about Cambridge, underscoring investors' concerns about regulation that could crimp the leading social network's profitability.

Amazon (NASDAQ:AMZN) late on Thursday is expected to report a 40% jump in revenue to $50 billion as the online retailer continues its expansion into cloud computing and brick-and-mortar groceries. Chief Executive Officer Jeff Bezos may face questions from analysts about how Amazon might react to U.S. President Donald Trump's allegations that the company enjoys unfair business advantages, including its use of United States Postal Service.

Also reporting this week are Twitter (NYSE:TWTR), Qualcomm (NASDAQ:QCOM), eBay (NASDAQ:EBAY) and PayPal (NASDAQ:PYPL) on Wednesday, and Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) and Baidu (NASDAQ:BIDU) on Thursday.

Among non-tech names, Boeing (NYSE:BA), Caterpillar (NYSE:CAT), 3M (NYSE:MMM), United Technologies (NYSE:UTX), Verizon (NYSE:VZ), AT&T (NYSE:T), Comcast (NASDAQ:CMCSA), Visa (NYSE:V), Ford (NYSE:F), General Motors (NYSE:GM), UPS (NYSE:UPS), Starbucks (NASDAQ:SBUX) and ExxonMobil (NYSE:XOM) are some of the names on the docket for this week.

First-quarter profit at S&P 500 companies are expected to have recorded their strongest gain in seven years. Of the 87 companies that have reported so far, around 80% have topped profit expectations, according to FactSet.

U.S. stocks fell on Friday, as Apple (NASDAQ:AAPL) led a decline in technology stocks and investors worried about the impact of rising U.S. bond yields.

The 10-year Treasury yield reached 2.96%, its highest level since 2014, while the two-year yield rose to its highest level in a decade.

Rising bond yields can crimp demand for assets perceived as riskier, such as stocks, particularly when those yields are higher than those of equities.

2. European Central Bank Policy Meeting

The European Central Bank is all but certain to keep interest rates at their current record low levels when it holds its third meeting of the year at 1145GMT (7:45AM ET) on Thursday.

President Mario Draghi will hold a closely-watched press conference 45 minutes after the rate announcement as investors seek further clues on when the central bank plans to end its €2.5 trillion stimulus program.

Expectations have grown recently that policymakers may take another small step in removing stimulus after dropping a long-standing pledge to increase its bond buying if needed at its last meeting in March.

However, some experts believe such a step may be hasty given some signs of a softening in economic data and brewing concerns of an escalation in global trade disputes.

Concerned about a recent dip in both headline and underlying inflation, economists anticipate that ECB steps towards the end of asset buys will come only in July.

The ECB cut its monthly bond purchases from €60 billion to €30 billion back in October, but extended the program until the end of September 2018, citing muted price pressures.

This week's calendar also features flash April PMI surveys on manufacturing and service sector activity due on Monday, as well as a reading on April German business sentiment from the IFO on Tuesday.

3. BOJ Policy Announcement

The Bank of Japan is also seen keeping policy on hold at the conclusion of its two-day rate review on Friday, including a pledge to keep short-term interest rates at minus 0.1%.

BoJ Governor Haruhiko Kuroda will hold a press conference afterward to discuss the decision.

The Japanese central bank will also publish its latest quarterly outlook report, which will contain the latest forecasts on economic growth and inflation.

Most likely, there will be little change to the projections, with policymakers maintaining their view on hitting the 2% inflation target in 2019.

That could increase the prospects of the BoJ deciding to debate winding down its massive stimulus next fiscal year.

But a complete shift to monetary tightening is unlikely as Kuroda has said inflation must exceed a stable 2% before the bank can trim its huge holdings of government bonds and exchange-traded funds.

There have been some indications recently that the BoJ is setting the ground to begin discussions on winding back its quantitative easing program thanks to an improving economic outlook.

Japan's economy, the world's third largest, expanded at an annualized rate of 1.6% in October-December, posting its longest continuous expansion since the 1980s bubble economy.

However, consumer prices have risen more slowly than the BoJ had hoped, as companies hold off on raising prices and wages.

4. U.S. Advanced First Quarter GDP

Investors will keep an eye on a preliminary reading of first-quarter U.S. growth due at 8:30AM ET (1230GMT) Friday to gauge if the world's largest economy is strong enough to withstand multiple rate hikes in the coming months.

The report is expected to show growth in the January-March period slowing from an annual rate of 2.9% to 2.0%, as consumer spending is forecast to have slowed sharply from the last quarter.

Despite the expected slowdown, the data is unlikely to make much impact on Fed policymakers given the expected boost over the coming months from the Trump administration tax cuts.

Besides the GDP report, this week's calendar also features data on existing home sales, consumer confidence and durable goods orders.

The majority of economists believe that the Fed will hike rates in June, followed by another hike in September, with a third move higher arriving in December.

5. UK Preliminary Q1 GDP

Market players will focus on the first estimate of British first-quarter GDP for further hints on the health of the economy and the likelihood of the Bank of England raising interest rates this year.

The report, released by the Office for National Statistics at 0830GMT (4:30AM ET) on Friday, is forecast to reveal the economy grew 0.3% in the first three months of 2018, after expanding at a 0.4% clip in the previous three-month period.

On an annualized rate, the British economy is expected to grow 1.4% in the three months ended March 30, the same as its rise in the preceding quarter.

The BoE kept interest rates steady last month, but two policymakers unexpectedly voted for a hike, reinforcing the view that borrowing costs will rise in May for only the second time since the 2008 financial crisis.

Politics is also likely to be in focus, especially as the Brexit negotiations enter a key phase with less than a year to go until the deadline to agree to an official deal is reached.

While Britain's economy is lagging behind the global recovery, it has held up better than the gloomy forecasts made at the time of the 2016 vote to leave the European Union.

Stay up-to-date on all of this week's economic events by visiting:

Economic Calendar - Top 5 Things to Watch This Week

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