US Fed expected to increase interest rates, Apple to release earnings report, and central bank meetings in Australia and Eurozone scheduled next week
The focal point of the week will undoubtedly be the Federal Reserve’s announcement on Wednesday when the institution is anticipated to announce another quarter-point rate hike. There will be a flood of profits, including those from Apple. The week is concluded by the release of the U.S. jobs report and central bank meetings in Australia and the Eurozone.
On Wednesday, the Fed is anticipated to increase interest rates by another 25 basis points against a backdrop of continuing inflation and escalating worries about the future of the economy.
It would be the tenth consecutive rate increase, raising the benchmark to its highest level since 2007—between 5% and 5.25%. Even while price pressures are easing, inflation is still much higher than the Fed’s 2% annual target.
Fed officials may announce a halt in June given recent signals of banking sector stress that include issues at First Republic Bank (NYSE:FRC).
According to Fed experts, the tighter credit conditions could operate as a second rate increase, potentially lowering the number of increases required to drive inflation back to the target level.
On Friday, the United States will release its April employment report, which is predicted to reveal that the country’s economy added 180,000 jobs. It would be a good number, but it would be the third month in a row that job growth has moderated.
While average hourly wages are anticipated to remain stable, the unemployment rate is anticipated to increase to 3.6%.
Data released last week revealed that first-quarter growth slowed more than anticipated, so the employment report will be extensively scrutinised for clues as to how the labour market’s demand is faring.
The economic calendar also includes information from March on job vacancies, newly increased initial unemployment claims, and April’s ISM surveys of purchasing managers in the manufacturing and service sectors.
The largest U.S. corporation by market value, Apple (NASDAQ:AAPL), is scheduled to release its earnings report on Thursday. According to expert projections, the company’s fiscal second-quarter revenue will fall to $93 billion, with earnings per share coming in at $1.43.
Given its significance to numerous industries, Apple’s report serves as a leading indicator of consumer demand around the world, and its findings could have a significant impact on markets.
Overall, first-quarter earnings have exceeded expectations. According to Refinitiv, earnings for the first quarter are expected to have decreased 1.9% from the same period last year with little over half of the S&P 500 having reported. The drop there is less than the 5.1% dip that was anticipated at the beginning of April.
Ford (NYSE:F), Starbucks (NASDAQ:SBUX), Kraft Heinz (NASDAQ:KHC), Marriott International (NASDAQ:MAR), Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE), and Uber Technologies (NYSE:UBER) are a few additional well-known businesses that will be reporting in the upcoming week.
On Thursday, the European Central Bank is expected to increase interest rates once more; two possible increases are 25 and 50 basis points. The balance will be tipped by Tuesday’s figures on bank lending and inflation in the Eurozone.
The consumer price inflation numbers for April are anticipated to show that the uncomfortably high underlying price pressures, which are running above 5%, are still present. This would strengthen the case for a larger rate increase.
But the case for a smaller rate hike would be strengthened if bank lending data revealed that credit conditions had significantly tightened.
Following new consumer price data that strengthened the case that inflation peaked at the end of last year, the Reserve Bank of Australia is anticipated to hold interest rates steady at its meeting on Tuesday.
Although the RBA halted a year-long cycle of rate increases in April, it had previously issued a warning that any indications of sticky inflation could lead to further increases. The bank’s April meeting minutes revealed such a rise was strongly contested.
Over the past year, the bank has increased interest rates by a total of 350 basis points in an effort to combat an increase in inflation following COVID.