• Weekly Market Outlook

    From interest rate decisions to growth in services; to China’s trade data, and Apple’s big developers conference, I’m Jeff Kleintop with 90 seconds of what you need to know for the week ahead:

    Central banks in Australia, Canada, India, and Poland meet with no change in rates expected but it could be a skip rather than a pause. The markets placed low odds on a Fed rate hike in June, but an over 80% chance by July. It’s still a tale of two economies, with manufacturing remaining in recession territory as indicated by last Thursday’s May manufacturing PMI, while May’s Services PMI is due Monday and it’s expected to continue to show steady growth with headwinds from rate hikes yet to fully hit home.

    The latest beige book in the U.S., covering conditions in April and early May, noted consumer spending was steady or higher in most districts with demand for services like leisure and hospitality still rising.

    China’s PMI figures indicate the new Covid-19 wave not having a major impact, but investors are on the watch for additional stimulus to help boost growth in China in the second half of the year. China’s May trade data due Tuesday are likely to show export growth stalling again, reflecting weaker foreign demand. Chinese post-Covid recovery is already losing some steam and weaker exports will further sap that momentum, adding to the case for government stimulus.

    Apple’s worldwide developers conference takes place this week amid the market’s recent obsession with everything AI. The tech giant’s long-awaited mixed reality headset is expected to be a feature as tech investors seek the next big thing.

  • Weekly Market Outlook

    From the U.S.debt ceiling deliberations to rate cuts in China, the pace of U.S. retail sales and the job picture in Europe. I’m Jeff Kleintop with 90 seconds of what you need to know for the week ahead.

    Stocks in the U.S. were weighed down by the looming debt ceiling last week. While the White House meeting didn’t yieldany big breakthrough., staffs continued meeting to discuss a deal. The president and four top congressional leaderswill meet again early this week as the June 1st deadline looms.

    A deal may be taking shape in the form of clawing back billions of unspent COVID money, reforming the energy project permitting process, and agreeing to negotiate a set of spending cuts in the upcoming budget package. All seems like it could work, but getting a deal passed by both chambers in time is still a risk.

    China’s April economic data, due Wednesday will likely see a production and retail sales jump in comparison to last year’s terrible numbers during the lockdowns. But the month on month figures may show slowing reopening momentum and open the door to a rate cut by China’s central bank. Auto sales will likely boost April U.S. retail sales due Tuesday.

    Auto sales jumped to 15.9 million annualized units in April from 14.8 in March. But other categories may signal softness.

    Also on Thursday, the U.K. will release its latest batch of labor market data. The Bank of England raised its target rate by 25 basis points last week. Another strong reading for wages may keep policymakers on a path of higher rates, with the next meeting on June 22nd.

  • Weekly Market Outlook

    Will Charles III’s first act as King be to raise inflation? Will CPI show the Fed’s fight against inflation is far from over? And will there be any signs of a breakthrough on the debt ceiling? I’m Jeff Kleintop with 90 seconds on all this and much more of what you need to know for the week ahead.

    The weekend’s coronation of King Charles III is expected to have cost £100million, but deliver £350 million in extra sales for UK pubs and restaurants. That’s a nice multiplier effect, but it comes when services and food inflation are already high and could add to further inflation pressures.

    On Tuesday, President Biden is scheduled to meet with congressional leaders on the debt ceiling. Treasury Secretary Yellen has said the default could come as soon as June 1st. Also, Tuesday is Victory Day in Russia, commemorating World War II, as a spring offensive by Ukrainian forces appears to be getting under way. A day later, NATO defense chiefs meet in Brussels.

    Finally on Tuesday, China’s inflation data is likely to keep the window open for the People’s Bank of China to add stimulus with a rate cut in coming months. CPI likely rose just 0.3% from a year ago. On Wednesday, falling hard on the heels of the Fed’s meeting last week where they signaled an end to the series of rate hikes, the April CPI release may highlight that the fight against inflation is far from over. In year-over-year terms, CPI inflation is expected to remain at 5%, with core inflation stubbornly elevated at 5.4.

    On Thursday, the Bank of England is set to lift interest rates by 25 basis points to 4.5%. The Central Bank is likely to cite recent surprises in CPI and wage data as justification.

  • Weekly Market Outlook

    From Federal Reserve and European Central Bank interest rate decisions, to the jobs report, and the peak of quarterly earnings reports, I’m Jeff Kleintop with 90 seconds of what you need to know for the week ahead.

    The Fed will announce its latest decision on Wednesday. Nearly everyone expects a one and done 25 basis point hike, taking the upper bound of the funds rate to 5.25% and marking the end of the tightening cycle. But with inflation still running at more than double the Fed’s 2% target, there’s abundant reason for the Fed to leave rates there for a while, despite stress among some banks. And a day later on Thursday, the European Central Bank is also expected to hike by 25 basis points. But the hike probably won’t mark the end of the cycle. Upside surprises in the Eurozone inflation and bank lending data, due two days before the ECB decision, could even bring another 50 basis point hike into play.

    On Friday, both Canada and the US report the April employment numbers. In the U.S., the April jobs data is expected to show a slowdown in the pace of hiring, but not enough to get inflation back to target. Economists anticipate a payroll gain of about 180,000, which is less than the prior month’s 236,000. The unemployment rate seen holding at 3.5%. Now it’s the peak week for earnings reports for the 162 S&P 500 companies expected to report and 156 companies in Europe’s Stoxx 600 index. Overall earnings are coming in better than expected, even more so than in prior quarters.

  • Weekly Market Outlook

    From GDP reports, to the Fed’s preferred wage and inflation measures, to tech earnings, this is Jeff Kleintop with 90 seconds on what you need to know for the week ahead.

    Last week, we got through a big week for Financials’ earnings, which showed overall growth in profits and the stocks added to their gains and are now the 2nd best performing sector in April. This week, we hear from many big tech companies and analysts who are expecting a big decline in tech profits – double-digits this quarter – one of the biggest declines in decades, as businesses curb spending and face higher borrowing costs. Any earnings misses on already-revised down estimates could weigh on the sector, which is among the worst performers in April. In the US, the Fed’s favored measure of inflation, the PCE deflator, on Friday will probably tell a similar story to CPI. Falling energy prices and slower rental inflation may mean a deceleration in the headline reading, but core inflation is likely to remain elevated. And that, combined with a firm Employment Cost Index report, means this week’s data will probably make it even more likely the Fed will hike by 25 basis points at the early-May meeting. Like the US GDP data this week, the Eurozone GDP figures are likely to show the economy grew in the first quarter. And that comes despite worries entering the quarter of a potential energy price shock-induced recession. Europe’s stocks have been outperforming the US so far this year on better-than-expected growth, but a resilient economy means underlying inflation may stay higher for longer. We get April CPI data for Germany, France, and Spain, which may add to the pressure on the European Central Bank to carry on hiking rates.