Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


World Week Ahead: US earnings, ECB rate decision

World Week Ahead: US earnings, ECB rate decision

By Margreet Dietz

April 18 (BusinessDesk) - After markets rallied on better-than-expected corporate earnings, notably from US banks, investors will eye more results including from Morgan Stanley, IBM and Yahoo as well as a European Central Bank policy meeting.

Last week the Dow Jones Industrial Average rose 1.8 percent, the Standard & Poor’s 500 Index gained 1.6 percent, while the Nasdaq Composite Index climbed 1.8 percent.

“Earnings are off to a very healthy start, financials set a positive tone,” Joe Kinahan, chief strategist at TD Ameritrade Holding, told Bloomberg. “For the market to rally, financials have to be performing and financials performed [last] week.”

Morgan Stanley is the next US bank to report earnings, today, followed by Goldman Sachs on Tuesday. This week will also offer results from Netflix, Intel, Coca-Cola, Alphabet, Starbucks, and Caterpillar.

Even as this US earnings season is expected to be the worst since the financial crisis in 2008, many see reasons to be optimistic.

The low point of the US profit downturn may have been at the end of last year, based on trailing fourth-quarter data, Richard Bernstein, chief executive and chief investment officer at Richard Bernstein Advisors in New York, told Reuters. Bernstein is overweight sectors he considers sensitive to the profit cycle — energy, materials, financials and technology.

Investors will eye US Federal Reserve officials speaking today, New York Fed President William Dudley as well Minneapolis Fed’s Neel Kashkari and Boston Fed’s Eric Rosengren.

The Federal Open Market Committee is set to start its next two-day meeting on April 26, and expectations for interest rate increases have eased in recent weeks, one reason why the greenback has fallen to its lowest in nine months.

Last Friday Treasuries rose, pushing yields on the benchmark 10-year note four basis points lower to 1.75 percent, after a surprise drop in March US manufacturing output.

US yields will remain low because of “weak data, the Fed not raising rates and negative rates globally,” Ray Remy, head of fixed income in New York at Daiwa Capital Markets America, one of 22 primary dealers that trade with the Fed, told Bloomberg.

Economic data set for release this week include the housing market index, today; housing starts, due Tuesday; existing home sales, due Wednesday; weekly jobless claims, Philadelphia Fed business outlook survey, Chicago Fed national activity index, leading indicators, and the FHFA house price index, due Thursday; as well as the preliminary PMI manufacturing index, due Friday.

"The first quarter was clearly a dud, but there are reasons to be optimistic,” Ryan Sweet, senior economist at Moody’s Analytics in Westchester, Pennsylvania, told Reuters. “There are still measurement issues, with the residual seasonality in GDP, and history shows that reverses in the second quarter.”

In Europe, the Stoxx 600 Index climbed 3.3 percent last week, stemming four straight weekly slides.

On Thursday, the European Central Bank is set to announce its latest policy decision, followed by a press conference with President Mario Draghi.

Last month the ECB lowered its key interest rates and increased its bond-buying programme in an effort to stoke growth and inflation.

“The problem for many central banks is that the market is assuming that, to some extent, they have reached their limit and have run out of ammunition,” Manuel Oliveri, a currency strategist at Credit Agricole’s corporate and investment-banking unit in London, told Bloomberg. “Markets do not fully understand or perceive well the most recent policy steps by central banks.”


© Scoop Media

Business Headlines | Sci-Tech Headlines


Water: Farming Leaders Pledge To Help Make Rivers Swimmable

In a first for the country, farming leaders have pledged to work together to help make New Zealand’s rivers swimmable for future generations. More>>


Unintended Consequences: Liquor Change For Grocery Stores On Tobacco Tax

Changes in the law made to enable grocery stores to continue holding liquor licences to sell alcohol despite increases in tobacco taxes will take effect on 15 September 2017. More>>

Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>


By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>


Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>


Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>