Major Events of Last Week
The global financial markets finished last week on a high note after a trio of US technical giants published earnings reports from the first quarter of 2015, which surpassed analysts’ expectations. Stronger-than-expected results from Microsoft, Amazon and Google prompted investors to increase their risk appetite. The USA released another disappointing indicator last Friday suggesting that its economic recovery has definitely encountered a soft patch. The Greek debt drama intensified further as Athens struggled to attain a resolution capable of preventing national bankruptcy. The major US indices edged higher towards market close exemplified by the Dow Jones Industrial Average climbing by 22 points; the S&P500 inching upwards by 4 points and the NASDAQ climbing by nearly 36 points.
US leading indices surged to record highs late last week after Google, Microsoft and Amazon posted impressive earnings figures for the first quarter of this year. Specifically, Amazon witnessed its shares register historic highs by soaring 14.1%. Similarly, Google’s stock rose by 2.9% while those of Microsoft leapt by over 10% after both these technical behemoths posted inspiring quarterly performances. Economists summarized these developments by advising that investors can now anticipate better earnings reports for the second quarter, especially if oil prices and the US Dollar stabilize. Traders will next focus their attention on Apple’s earnings report, which is scheduled for release on Monday.
The US Department of Commence presented a key economic indicator last Friday disclosing that US business investment had registered its seventh successive monthly decline during March. This disappointing data endorsed the growing image of a significant economic slowdown portrayed by the recent release of weaker-than-expected US employment, housing and retail sales statistics. This deterioration in growth may now be of such a magnitude that it could convince the US Federal Reserve to delay hiking its interest rates. Many US companies have already issued serious warnings about their ability to create competitive products against a backdrop of cheap oil and a strengthening US Dollar. For example, the 12% appreciation of the greenback against other major currencies since last June caused Procter & Gamble, the biggest global producer of household goods, to declare an 8.3% quarterly sales slump last week.
Elsewhere, Greece continued to totter on the verge of bankruptcy. Although Angela Merkel, the German Chancellor, stressed that all policy options will certainly be considered to prevent such a catastrophe, Eurozone finance ministers assertively emphasized late last week that no further Greek aid will be forthcoming unless Athens produces an agreeable reform plan within proposed deadlines.
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What to Expect This Week
The following major global economic indicators will be published over the coming days.
Glenn Stevens, the Governor of the Reserve Bank of Australia, is scheduled to deliver a speech on Monday. He is expected to once again undermine his national currency.
On Tuesday, Great Britain will declare its Gross Domestic Product for the first quarter of 2015. Expert consensus is currently favoring 0.5% growth. However, a pending UK general election would provide the catalyst for a surprise.
Germany will disclose the first sighting of its Consumer Price Index (CPI) for this month on Wednesday. The euro could come under substantial pressure if this parameter misses its -0.1% prediction. Later, the USA will reveal its Gross Domestic Product for the first quarter. Many economists are presently forecasting a dour result amid dismal weather conditions and the recent release of disappointing economic indicators.
The pivotal event of the week could then occur when the Federal Open Market Committee (FOMC) delivers its latest Rate Decision and Monetary Policy Statement during Wednesday afternoon EST. There is now little prospect of a surprise interest rate hike following last month’s posting of a disastrous US labor report. New Zealand will terminate the session by announcing its own future monetary guidance policy and interest rate decision. Any further mention of potential interest rate cuts could be a market moving.
The Bank of Japan will commence Thursday by issuing its rate decision and Monetary Policy Statement. This event, which is supported by a press conference, is not expected to generate any surprises this time around. Next, the Eurozone will release the first viewing of its Consumer Price Index for April. Analysts will be keen to learn if the recent instigation of a massive bond-buying program by the European Central Bank is starting to influence inflation. Finally, Canada will publish its Gross Domestic Product for February, which is forecasted to decline by 0.2%.
On Friday, China will issue its Manufacturing Purchasing Managers’ Index (PMI) for this month. Expect a significant sell-off in the Australian and New Zealand Dollars if a reading below 50 is registered. The UK will then disclose its Manufacturing PMI for April. If the predicted increase is verified, then Sterling could acquire a much needed boost. The USA will complete the week by revealing its own Manufacturing PMI for this month. This parameter could provide vital insights into the all-important release of the US Labor Report for April next week.
