Last week, the global focus among investors was on global trade and emerging tensions in the Middle East. On trade, the rhetoric on trade war calmed after Chinese president promised to reform the country and open up the economy to foreign companies. It was also a victory for free traders after Trump indicated that he would rejoin the Trans Pacific Partnership (TPP) deal he trashed during the campaign. This came a week after the new economic advisor, Larry Kudlow took office.
This week, the focus among investors will remain in Washington where Trump’s administration is rocked with major challenges. Two weeks ago, the special counsel recommended to the Deputy Attorney general for the FBI to conduct an investigation on Donald Trump’s personal attorney, Michael Cohen. This was a major news because it showed that the investigation is closing in on Trump’s inner circle. Last week, there was conversation in Washington about Trump and his desire to fire the deputy attorney general to derail the special counsel investigation.
In addition to this, this week might be a big one for investors as the earnings season takes shape. On Friday last week, the season kicked off with the release of financial reports by major banks like JP Morgan, Citi, and Wells Fargo. The three banks reported better than expected financial results.
This week, the earning season will include major companies like Bank of America, Netflix, IBM, Altaba, Johnson and Johnson, American Express, Kinder Morgan, Morgan Stanley, Danaher, Philip Morris, Novartis, Unilever, Honeywell, and Waste Management among others. Investors will pay a closer attention to Netflix and the number of subscribers it added during the quarter.
Unlike last week, this week, several major pieces of economic data will be released. Today, the People’s Bank of China (PBOC) started by hiking the 14-day interest rates by 5 basis points to 2.70%. This was the second time this year that the bank did this.
The US will release the retail sales data. Analysts expects the data to show that the retail sales increased by 0.4% in March while the core retail sales remained steady at 0.2%. In the past two months, the data has showed decreased retail sales growth, with the growth being in the negative territory. Analysts will use this data to gauge the performance of the tax cuts package passed by the Trump administration.
Tomorrow, we will get the minutes from the Reserve Bank of Australia. These minutes will show the rationale behind the officials’ recent decision to leave interest rates unchanged. Then, we will get the economic growth data from China. Traders expect the Chinese economy to potentially grow by 6.8% and 1.5% MoM. In the UK, we will get the employment change numbers. Traders expect the UK’s average earnings + bonuses to potentially increase by 3.0%, up from 2.8% last month. This data will be followed by the CPI data on Wednesday that may give traders a better picture about inflation.
On Wednesday, we will receive the CPI data from Europe. This data is expected to show that Europe’s MoM CPI increased from 0.2% to 1.0% while the annual change remained the same at 1.4%. Other CPI data expected during the week will be from New Zealand, and Canada.
We will also receive the interest rate decision by Bank of Canada on Thursday, US Building Permits, employment data from Australia, and manufacturing data from the US.