To start your trading week, let us have a peek at what the global market sentiment will be like this week through our Week In Review.
Investor sentiment is shaky as the crisis in Ukraine enters its third month, and the lockdown of 25 million people in Shanghai is about to tip into its second month.
They are worried that rising consumer prices will quickly lead to a rise in global interest rates. So far this earnings season, investors are hoping that the dynamic will shift in the coming week as mega-tech companies begin to report earnings and economic data becomes available. This will provide the positive momentum for a market rebound.
Nonetheless, rising costs and the most hawkish Fed since 2006 have kept investors from buying more stocks in this economic environment.
Here is what you should know for this week.
Giant Tech Earnings
It’s going to be a busy week for the S&P 500, with almost 180 companies worth about half of the index’s value reporting their earnings.
This is amid hopes that solid corporate earnings will bolster U.S. equity markets, which have been rocked by the Federal Reserve’s hawkish pivot.
Investors will be watching for reports from Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Alphabet, the parent company of search engine Google (NASDAQ:GOOGL).
All four stocks have fallen so far this year, with Apple losing around 9%, Amazon down 13%, Alphabet dropping 17%, and Microsoft off 18%.
Shares of Netflix (NASDAQ:NFLX) have fallen after the streaming company reported a drop in subscribers. This has made people more worried about tech company earnings in the first quarter.
Among some of the other big names reporting during the week are Facebook (NASDAQ:FB) owner Meta Platforms, payment companies Visa (NYSE:V) and Mastercard (NYSE:MA), oil majors Chevron (NYSE:CVX), and Exxon Mobil (NYSE:XOM), and consumer companies Coca-Cola (NYSE:KO) and Pepsico (NASDAQ:PEP).
Stocks Slide, Dollar Climbs
So far, it’s been a bleak year for U.S. stocks and tech firms, and the ongoing earnings season could make matters worse.
The Wall Street’s three main benchmarks ended the week in negative territory on Friday, marking the third consecutive week of losses for the S&P 500 and Nasdaq, while the Dow Jones Industrial Average posted its fourth weekly decline in a row.
Friday’s 2.82% drop in the Dow was its biggest one-day decline since October 2020.
Traders are getting used to new data from earnings and are worried about the risks of the Fed raising interest rates too quickly. This has led to more big swings in the stock market recently.
On the other hand, the US Dollar’s (via the DXY Index) strong run continued through the third week of April, adding another +0.62%. The DXY Index has been positive in 12 of the 16 weeks thus far in 2022, good for a +5.69% advance year-to-date.
EUR/USD rates, which spent most of the first four days of the week in positive territory, ended up down by -0.11%. GBP/USD rates dropped by -1.71%, their worst weekly performance since June 2021. USD/JPY rates added +1.69%, their seventh consecutive weekly gain.
Europe Inc: Earnings & Inflation
European earnings start this week, and while companies are expected to have been able to deal with higher prices in the first quarter, investors will be very interested in what they have planned for the rest of the year.
More than 140 companies are due to report results for the week, including consumer goods giant Unilever PLC (LON:ULVR), Nivea maker Beiersdorf (ETR:BEIG) along with leading banks UBS Group (SIX:UBSG), Deutsche Bank (ETR:DBKGn), HSBC (LON:HSBA) and Barclays (LON:BARC).
In addition, the Eurozone will release statistics on first-quarter GDP on Friday, as well as preliminary consumer price inflation data for April, which is predicted to come in at 7.4%, nearly four times higher than the European Central Bank’s objective of 2%.
Keep an eye on the market prices and while you wait for your trade breakout, take advantage of the Juno Markets Economic Calendar to keep yourself updated with the market’s most important economic news events. https://www.junomarkets.com/en/resources/economic-calendar/
The Week Ahead
All times listed are EDT.
4:00: Germany – Ifo Business Climate: expected to edge down to 89.1 from 90.8.
8:30: US – Core Durable Goods Orders: seen to jump to 0.6% from -0.6%.
10:00: US – CB Consumer Confidence: probably edged higher, to 108.0 from 107.2.
10:00: US – New Home Sales: predicted to slip to 765K from 772K.
21:30: Australia – CPI: anticipated to climb to 1.7% from 1.3%.
10:00: US – Pending Home Sales: likely to rise to -1.5% from -4.1%.
10:30: US – Crude Oil Inventories: forecast to surge to 2.471M from -8.020M.
21:30: Australia – Retail Sales: seen to fall to 1.0% in March from 1.8%.
Tentative: Japan – BoJ Monetary Policy Statement, Outlook Report.
23:00: Japan – BoJ Interest Rate Decision.
Tentative: Japan – BoJ Press Conference.
8:30: US – GDP: forecast to plummet to 1.1% from 6.9% QoQ.
8:30: US – Initial Jobless Claims: predicted to edge lower to 180K from 184K.
21:45: China – Caixin Manufacturing PMI: expected to rise to 50.0 from 48.1.
4:00: Germany – GDP: seen to rise to 0.2% from -0.3% QoQ.
5:00: Eurozone – CPI: likely to have remained steady at 7.4 YoY.
6:30: Russia – Interest Rate Decision: forecast to jump to 20.00% from 17.00%.
8:30: Canada – GDP: to jump to 0.8% from 0.2% MoM.
21:30: China – Manufacturing PMI: likely to have ticked higher, to 49.9 from 49.5.
21:45: China – Caixin Manufacturing PMI: previous print came in at 48.1.