Welcome to the Investors Trading Academy economic calendar of the week. Each week our news analysts review the upcoming economic events that you should be monitoring. The coming week finds us in the midst of US earnings season, with plenty of UK numbers coming through as well. Tech giants like eBay and Facebook are on the list, as well as those from the more traditional parts of the economy such as Ford and Dow Chemical. The preceding week saw several firms miss expectations and this caused weakness in indices, so if this turns into a trend it will be difficult for stock markets to repeat the performance of the past week.
Investors will keep close tabs on the result of the Federal Reserve’s next two-day policy meeting on Wednesday for any change of tone in the US central bank’s policy statement. The market is not expecting a rate hike at this point and with no press conference following the publication of the statement the language of the document will be closely scrutinized for clues about the June 15 FOMC. The Fed has downgraded its rate hike expectations for 2016 citing global headwinds that have limited U.S. growth. So far employment remains the strongest pillar of said recovery but the job gains and the lowest unemployment claims in 42 years won’t be enough to sway the opinion of Fed members to vote for a rate hike until other economic gauges show improvement.
That comes as investors continue to struggle to reconcile Fed speak calling for two and even up to three rate hikes over the rest of the year with financial markets currently pricing about even odds of just one additional round of monetary tightening in 2016.
US first quarter gross domestic data scheduled for release on the following day may serve to highlight the risk the Fed runs of possibly painting itself into a corner, although statistics on economic growth around the turn of the year are notoriously unreliable for well-documented reasons.
Ahead of that event, on Friday analysts at Deutsche Bank wrote to clients to say that “market expectations for the Fed already appear close to maximum ‘dovishness’, with improving US macro momentum, lower financial stress and rising inflation all making it more likely that the Fed will attempt another rate hike over the coming months.”
In the UK on the other hand, Wednesday’s preliminary GDP estimates might easily make the headlines the next day if Credit Suisse is right in forecasting quarterly growth of 0.4% instead of the 0.6% penciled in by the consensus.
Mondays release of the IFO institute’s closely-followed business confidence index for April will also be in focus, following the lackluster ‘flash’ Eurozone purchasing managers’ indices from Markit on 22 April.
By Barry Norman, Investors Trading Academy – ITA
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