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Top 5 things to watch in markets in the week ahead

Published 05/19/2024, 05:34 AM
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Investing.com -- The Federal Reserve is to publish the minutes of its latest meeting and several Fed officials are to deliver remarks as renewed expectations for rate cuts power markets higher. AI darling Nvidia (NASDAQ:NVDA) is to report earnings, PMI releases will give insights into the health of the global economy, while the U.K. is to release what will be closely watched inflation data and the Reserve Bank of New Zealand meets. Here’s what you need to know to start your week.

  1. Fed minutes, speakers

On Wednesday the Fed is due to publish the minutes of its April 30-May 1 meeting, when Fed Chair Jerome Powell indicated that rates are likely to remain higher for longer amid lingering inflation pressures.

Since then, a report last week showed that U.S. consumer prices increased less than expected in April, indicating that inflation resumed its downward trend at the start of the second quarter.

Several Fed officials are also due to speak during the week, including Atlanta Fed President Raphael Bostic, Governors Michael Barr, Christopher Waller and Philip Jefferson, Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin.

The economic calendar also includes reports on new and existing home sales, durable goods orders and consumer sentiment.

  1. Nvidia earnings

Nvidia's quarterly results on Wednesday could set the tone for U.S. stock markets and reverberate through companies exposed to the burgeoning artificial intelligence field.

The semiconductor company at the centre of the excitement over AI's business potential is expected to report a massive jump in revenue and profit for its fiscal first quarter.

Revenue is expected to rise to $24.8 billion, from $7.2 billion a year earlier, with earnings per share soaring to $5.57 from $1.09, according to LSEG data cited by Reuters.

Nvidia may need to meet those lofty expectations and then some to keep its soaring stock price moving higher. Shares have jumped over 90% this year after more than tripling in 2023, making the AI darling the third-largest U.S. company by market value.

  1. PMI data

The U.S., China, the euro zone and the U.K. are all to release May PMI data that should reinforce a brighter global economic outlook.

A slow euro area recovery appears to be underway after six straight quarters of stagnant or negative growth, U.S. inflation just resumed its downward trend and China grew faster than expected in the first quarter.

So, global PMIs should stay on the right side of the line between expansion and contraction.

Yet steep U.S. tariff increases on Chinese imports from electric vehicle batteries to computer chips highlight a fragile outlook for global trade and growth. China has vowed retaliation.

Manufacturers in Germany, Europe's biggest economy, are already experiencing shifts in world trade and geopolitics. Heightened trade tensions - with a U.S. election looming - could hurt them further, upend China's recovery and reignite U.S. inflation.

  1. U.K. inflation data

The U.K. is to publish April CPI data on Wednesday with economists expecting the annual rate of inflation to have slowed dramatically - by more than a percentage point - to near the 2% level targeted by the Bank of England.

There is one more inflation report due out ahead of the next BoE meeting on June 20 and sustained evidence of cooling price pressures could give officials all the encouragement they need to cut interest rates.

Ahead of the inflation numbers BoE Governor Andrew Baily is due to deliver remarks on Tuesday.

The U.K. economic calendar also features April retail sales data on Friday.

  1. RBNZ decision

The Reserve Bank of New Zealand is expected to leave rates unchanged on Wednesday for a seventh straight meeting, against a background of persistent inflation and a stalling economy.

The RBNZ was the first major central bank to ease at the start of the pandemic, and the first to hike in the aftermath.

Market bets for an eventual rate cut in October put it behind the European Central Bank which is expected to move in June, followed by the BoE in August and the Fed in September. Switzerland and Sweden have started easing.

The RBNZ itself is even less optimistic, projecting no rate cuts until next year.

--Reuters contributed to this report

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