US equities recovered from early losses on Monday, edging higher for the session ahead of inflation data later this week along with Q1 earnings.
United States
The S&P500 edged 0.10% higher overnight along with the Dow Jones 0.30% and Russell 2000 1.02% with the Nasdaq Composite little changed and the VIX 3.10% higher at 18.97. While modestly below forecasts, a solid employment report on Friday for March added to bets that the Federal Reserve is likely to hike rates by another 0.25% at the early May meeting. 236k jobs were added over the month, down from an upwardly revised 326k in February while the unemployment rate edged lower to 3.5% from 3.6%.
Key for determining the outlook for monetary policy is March inflation data released on Wednesday. Expectations are for headline prices to ease to 5.1% over the 12 months from 6.0% previously and core prices to edge modestly higher to 5.6% from 5.5% in February. Also in focus later in the week is the release of the latest FOMC policy minutes on Thursday along with producer price data for March. The week will then be rounded off with retail sales data expected to show a -0.4% decrease in March and the University of Michigan Consumer Sentiment survey for April forecast to be little changed.
Major financials will kick off earnings season in earnest this week with Wells Fargo, PNC Financial, JP Morgan, Citi Group and Blackrock all set to report. According to LPL Financial on the earnings season “Stocks may not get much support from earnings in the near term as the malaise continues. However, we do expect the market to benefit from the end of the Fed’s rate hiking campaign—likely in May”. According to estimates compiled by Bloomberg, earnings are set to decline -3.6% over the quarter for the S&P500 to $54.08 before rising to $54.49 and $56.75 over the following two quarters.
Europe
European equity markets were closed on Monday for the Easter holidays, with the Euro Stoxx 600 finishing 0.51% higher when it last traded on Thursday. The DAX was also 0.5% higher along with the CAC 0.12% and FTSE100 1.03%. In focus this week is Eurozone retail sales year-on-year for February tonight, the final reading of German inflation data for March on Thursday couped with UK GDP.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Australia
The Australian market was also closed on Monday for the Easter holidays, while ASX200 futures are pointing to a -22 point drop this morning or -0.3%. Investors will be focused on the Westpac Consumer Confidence report for April out at 10:30 AEDT this morning along with Chinese inflation data for March due at 11:30 AEDT. Thursday will also see the release of Australian employment data for March, set to show 20k jobs were added and the unemployment rate tick modestly higher to 3.6% from 3.5%.
Commodities
Oil prices were lower overnight with Brent crude down -0.9% to US$84.35 a barrel, with WTI -1.19% lower at US$79.74. In focus for oil this week is the release of the International Energy Agency’s oil market report on Friday as well as US crude oil inventories on Thursday for the week ending April 7th. Iron ore futures in Singapore rose 1.28% on Monday although are -0.5% lower this morning at US$116.90. Gold is -0.82% weaker at US$1,991 an oz along with Silver -0.42% while Bitcoin is 3.58% higher at US$29,142.
Economic Data
Tuesday 11th April
Australian Westpac Consumer Confidence (MoM Apr) 10:30
Chinese Inflation (YoY Mar) 11:30
Eurozone Retail Sales (YoY Feb) 19:00
Fed Harker Speech 06:00
This article was written by Oliver Gordon, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
