April 5 (Reuters) – ECB meeting, oil, US quarterly results and Chinese data will be on the market menu next week.
Overview of the market outlook in the coming days:
1/ LAST STOP BEFORE THE DROP
The next ECB meeting on Thursday is expected to confirm that the European Central Bank will cut rates in June.
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Operators consider a reduction of 25 basis points certain in June, while statements from monetary policy makers in this direction are increasing and inflation has slowed more than expected in March.
The only unknown will be the tone of the ECB’s speech, which may want to wait for more data, particularly on wages, before lowering rates.
2/ RAW REBOUND
Driven by geopolitical tensions and production problems, the price of a barrel of crude oil is approaching $90 for the first time in months, further complicating the equation for central banks.
The inflation measurements monitored by these institutions do not normally take energy into account, but companies are forced to deal with the rise in raw materials and pass it on to prices.
The rise in the dollar also increases the cost of crude importers and puts pressure on the currency of these countries.
3/ AMERICAN BANKS
On the corporate side, market attention will focus next week on the quarterly financial reports from major American banks, which will kick off the results season.
Following strong results in the fourth quarter of 2023, S&P 500 companies are expected to report a 5% year-over-year increase in profits in the first quarter, according to LSEG IBES.
Investors are counting on strong earnings to support rising valuations as stock markets reach record highs. The price-to-earnings ratio of the S&P 500 index has never been higher in about two years.
JPMorgan Chase, Citigroup and Wells Fargo will report results on April 12. Delta Air Lines and BlackRock will also release their results in the coming days.
4/ INDICATORS
Signs of a reacceleration in the Chinese economy continue to accumulate, supporting stocks. The Shanghai Composite rebounded at its fastest pace in a month after the latest manufacturing data.
A few days later, figures for services activity showed that the sector was recovering, reinforcing the ambient optimism.
The coming days will be marked by a succession of new indicators: consumer and production price indices on Thursday, commercial data on Friday.
The consumer price index will be key as investors fear the economy could tip into deflation. A second positive figure after last month would therefore be welcomed.
(Graphs Pasit Kongkunakornul, Sumanta Sen, Vineet Sachdev and Kripa Jayaram, Compilation Karin Strohecker; French version Corentin Chappron, edited by Bertrand Boucey)
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