Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

Top 5 things to watch in markets in the week ahead

Published 07/16/2023, 06:26 AM
© Reuters
US500
-
BAC
-
MSFT
-
GS
-
GOOGL
-
AAPL
-
AMZN
-
NVDA
-
PM
-
JNJ
-
NFLX
-
TSLA
-
META
-
GOOG
-

Investing.com -- Second-quarter earnings season kicks into gear, the U.S. and China release economic data and inflation figures out of the U.K. will likely determine the size of the Bank of England’s next rate hike. Meanwhile, oil prices look poised for another weekly gain.

1. Earnings time

Second-quarter earnings season gets underway in earnest in the coming week, with Tesla (NASDAQ:TSLA) the first of the massive growth and technology names that have dominated the U.S. stock market so far this year to report, with results expected on Wednesday.

Tesla is one of seven huge stocks, along with Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA) and Meta Platforms  (NASDAQ:META) recently dubbed the “Magnificent Seven” by investors. Shares in the megacaps have soared between 40% and over 200% so far this year, accounting for almost all of the S&P 500’s rally.

There are indications the rally is broadening to other sectors, but the outsize gains have come with big earnings expectations so if Tesla or any other megacaps disappoint this quarter, the hit to equity indexes could be severe.

A slew of other big companies also post results in the coming week. Bank earnings continue, with Bank of America (NYSE:BAC) on Tuesday and Goldman Sachs (NYSE:GS) on Wednesday. Also on the docket are Johnson & Johnson (NYSE:JNJ), Netflix (NASDAQ:NFLX) and Philip Morris (NYSE:PM).

2. U.S. economic data

U.S. retail sales data for June on Tuesday is expected to show an increase of 0.5%, boosted by rebounding auto sales and higher gasoline station sales, indicating that consumer demand remains resilient.

Investors will also get an update on the health of the housing sector with reports on building permits, housing starts and existing home sales. High mortgage rates are still weighing on sales of existing homes, but construction is improving given stable pricing and a pick-up in new home sales due to the lack of properties on the market.

There will also be reports on regional manufacturing activity, which is expected to remain sluggish along with the weekly data on initial jobless claims.

3. China economic data

A flurry of economic data from China on Monday is expected to show its post-pandemic bounce is rapidly losing momentum, fueling expectations that Beijing will soon need to unveil more stimulus measures.

Gross domestic product is expected to have grown by an annualized 7.3% in the three months to June, compared with growth of 4.5% in the first quarter.

However, that reading will be heavily skewed by a sharp slump in activity in the spring, when large parts of the country were still locked down.

Mounting deflationary pressure and a slump in trade have added to concerns over the outlook for the world’s second-largest economy, which as recently as six months ago had investors betting on a robust recovery.

4. U.K. inflation

The U.K. is to release June inflation data on Wednesday and investors will be watching closely as it will likely determine the size of the Bank of England’s next rate hike.

The headline consumer price index is expected to ease to 8.2% year-over-year from 8.7% in May as food and fuel prices dip. Core inflation is also expected to edge lower, but the services component is expected to hold steady at a post-COVID high of 7.4%.

In its June meeting minutes the BoE said further tightening would be required if there were signs of persistent inflationary pressures in the economy, including in services CPI.

This could make August’s meeting a close call: an uptick in services CPI would probably lock in bets for another 50-basis point hike, while a lower reading would probably nudge the dial in favor of a smaller 25 bps increase.

5. Oil prices

Oil prices recorded their third-straight weekly gain last week and the rally could resume in the coming week as easing inflation, plans to refill the U.S. strategic reserve, supply cuts and disruptions underpin prices.

"While oil prices are likely slightly overbought in the very near term, touching the highest levels since early May, the bias appears to be for a grind higher," Rob Haworth, senior investment strategist at U.S. Bank Wealth Management told Reuters.

Oil prices gained nearly 2% last week, after supply disruptions in Libya and Nigeria heightened concerns that the markets will tighten in coming months.

Oil prices fell more than a dollar a barrel on Friday as the dollar strengthened and oil traders booked profits from a strong rally.

--Reuters contributed to this report

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.