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In the Global Week Ahead, U.S. banks kick off Q1-24 earnings season.
Mainland China releases a deluge of its key macro data.
Across the Pond, stock and bond traders look for confirmation from the European Central Bank (ECB) that a June rate cut is really coming.
Oil prices appear to be on the rise again, clouding the consumer price inflation picture.
This gives monetary policy makers in Canada, New Zealand and Korea food for thought too.
These policy groups update us, as well.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Big U.S. banks report, kicking off Q1-24 earnings season.
Market fixation on U.S. monetary policy will be somewhat diverted in the coming week, as quarterly reports from major banks kick off earnings season.
Following strong fourth-quarter results to end-2023, S&P500 companies are expected to post a +5% year-on-year rise in first-quarter earnings, according to LSEG IBES.
Investors are counting on robust corporate profit this year to support rising valuations as the stock market has rallied to record highs. The S&P500's price-to-earnings ratio is hovering at its highest in about two years.
JPMorgan Chase, Citigroup and Wells Fargo all report results on April 12th. Delta Air Lines and BlackRock are among other notable companies set to provide quarterly updates in the days ahead.
(2) Geopolitics, including oil supply disruptions, put pressure on world oil prices.
Rising geopolitical turmoil and supply disruption in a number of production hot-spots are pushing oil prices back towards $90 a barrel for the first time in months.
Central banks tend to focus on so-called core measures of inflation that strip out energy and food prices. But for businesses on the ground, there's no taking the crude price out of the equation. And the assumption that the U.S. Fed might cut rates by less than its peers has pushed the dollar up almost across the board this year.
That in turn has undermined the purchasing power of big buyers in China, Japan, India and South Korea, raising their energy import bills.
All this complicates life for those countries' monetary authorities, which have either intervened, or threatened to intervene, to prop up their currencies to prevent a vicious-circle type of pickup in inflation.
(3) Mainland China’s stock markets seem to stir, along with that economy.
Promising signs of a long-awaited turnaround in China's economy keep building, helping keep stocks close to multi-month highs into a two-day public holiday from Thursday.
The Shanghai Composite recently enjoyed its biggest rally in a month after data showed the fastest expansion in manufacturing for more than a year. That was followed by even more hopeful numbers showing an acceleration in services activity, hinting that consumer animal spirits might finally be stirring.
The coming days bring a parade of fresh indicators that could support or subvert that optimism: consumer and producer price indexes on Thursday and trade data on Friday.
These will be important litmus tests of consumer appetite. The consumer price index meanwhile will be key since the first rise for six months in the previous batch of data is what helped Chinese stocks scale post-November peaks, though figures were potentially skewed by Lunar New Year holidays.
(4) Thursday, the European Central Bank (ECB) meets. LaGarde presser is key.
The European Central Bank meets on Thursday in what is likely the final hurdle before it starts cutting interest rates.
Traders see a nearly 100% chance of a 25 basis-point cut in June, so a green light is crucial to uphold market sentiment. A flurry of policymakers have explicitly signaled June as the date of a first move. Even Austria's uber-hawk governor Robert Holzmann is not opposed.
Data showing inflation falling unexpectedly to +2.4% in March should give the ECB further confidence.
So, the ECB is very likely to signal rate cuts are coming.
The question is how explicit policymakers will be about June, given they want to review first-quarter wage growth figures that will be released in May.
(5) More central bank decisions arrive, along with the ECB’s calls.
Rate setters elsewhere in the world are sandwiching the ECB: Canada and New Zealand meet on Wednesday, Singapore and South Korea on Friday.
No rate changes are anticipated, but traders want a sense of when rate cuts will come and how policymakers will navigate a delicate balancing act. Markets have trimmed bets for a June Canada rate cut after news the economy grew by 0.6% in January, its fastest growth rate in a year.
New Zealand is in a technical recession but with inflation still above 4.5%, easing is not expected until August.
Singapore is grappling with sticky inflation and the risk of elevated price pressures for longer as recent Taylor Swift concerts fueled service-sector price rises.
And Korea's central bank said in February it was too early to pivot with the path for inflation, at 3.1%, uncertain. Markets only bet on it cutting rates late this year.
Zacks #1 Rank (STRONG BUY) Stocks
(1) CRH (CRH - Free Report) : This is an $85 stock in the Building Products-Miscellaneous industry, with a market cap of $58.3B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
CRH plc manufactures cement, concrete products, aggregates, roofing, insulation and other building materials.
Through its subsidiaries, the company operates in Ireland, the United States, the United Kingdom, Spain, Germany and the Netherlands.
(2) Ford Motor (F - Free Report) : This is an $13 stock in the Domestic U.S. Auto industry, with a market cap of $52.5B. I see a Zacks Value score of A, a Zacks Growth score of F, and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
Ford Motor Company designs, manufactures, markets and services cars, trucks, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles.
Apart from vehicles, the company provides financial services through Ford Motor Credit Company LLC.
Ford has three reportable operating segments:
The Automotive segment is engaged in the design, development, manufacture, sale and service of Ford and Lincoln vehicles as well as service parts, and accessories.
The company's wholesales primarily consisted of vehicles sold to dealerships. It also sells parts and accessories to authorized parts distributors and offers extended service contracts.
The Mobility segment focuses on designing, building, growing and investing in mobility services, and autonomous technology businesses for the company. The segment works as a subsidiary of Ford under the name Ford Smart Mobility LLC.
The Ford Credit segment deals with vehicle-related financing and leasing activities.
(3) JD.com (JD - Free Report) : This is an $26 stock in the Mainland China Internet Commerce industry, with a market cap of $41.2B. I see a Zacks Value score of A, a Zacks Growth score of A, and a Zacks Momentum score of C.
Image Source: Zacks Investment Research
JD.com, Inc. operates as an online direct sales company in China.
The company, through its website www.jd.com and mobile applications offers a selection of authentic products.
It offers computers; mobile handsets and other digital products, home appliances; automobile accessories; clothing and shoes; luxury goods including handbags, watches and jewelry, furniture and household products; cosmetics and other personal care items; food and nutritional supplements; books, e-books, music, movies and other media products; mother and childcare products; toys, sports and fitness equipment; and virtual goods.
JD.com, Inc. is based in Beijing, China.
Key Global Macro
The biggest event is the European Central Bank (ECB) meeting on Thursday. President LaGarde’s presser probably matters the most.
On Monday, the Swiss unemployment gets a refresh for March. The prior month showed a low 2.2% mark. The SNB’s Chair Jordan also gives a speech.
On Tuesday, Japan’s Producer Price Index (PPI) for March comes out. The consensus is for +0.8% y/y, in line with the prior reading of +0.8% y/y.
On Wednesday, New Zealand’s RBNZ (at 5.5%) and Canada’s BoC (at 5.0%) gives up their April rate decisions.
Mainland China updates traders on their FDI flows for March. I see a -19.9% y/y mark from the prior month.
The U.S. CPI for March comes out. The prior broad CPI reading was +3.2% y/y. The core ex-food & energy was +3.8% y/y.
On Thursday, Mainland China’s CPI for March comes out. I see a prior +0.7% y/y reading.
There is an all-day Eurogroup Meeting.
The ECB (at 4.0% with the main refi rate) steps up to bat, with its monetary policy decisions. There is a press conference from ECB President Christine LaGarde, too.
U.S. initial jobless claims are still quite low at 221K. We get an update.
On Friday, Mainland China’s exports for March come out. I see a +7.1% y/y prior mark.
Mainland China’s Import data comes out too. I see a +10.3% y/y prior mark.
University of Michigan consumer sentiment comes out. I see a 79.4 prior mark.
Conclusion
Here are Zacks Research Director Sheraz Mian’s four Q1-24 EPS season points:
(1) Expect S&P500 earnings for Q1-24 to be up +2.5% y/y on +3.5% higher revenues.
This follows the +6.7% y/y earnings growth on +3.9% higher revenues in Q4-23.
(2) Tech and Energy sectors have the opposite effects on Q1-24 earnings growth.
The Tech sector is providing a boost. The Energy sector is pulling it down.
(3) For the Finance sector, total Q1 earnings are expected to be up +3.7% y/y on +2.4% higher revenues.
This would follow the sector’s +12.4% y/y earnings growth on +8.4% higher revenues in 2023 Q4.
(4) For Q1-24, Zacks expects ‘Magnificent 7’ earnings to increase +33.4% y/y on +13.2% higher revenues.
Excluding the Mag 7 Contribution?
Q1-24 earnings for the rest of the S&P500 index would be down -3.2% from the year-earlier period (versus +2.5% growth, otherwise).
The Masters golf tournament starts on Thursday April 11th.
That kicks off Spring in the USA for many golf-crazed traders.
Let’s have a great start to Q1-24 earnings season!
Warm Regards,
John Blank, PhD Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
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U.S. Earnings Season Begins: Global Week Ahead
In the Global Week Ahead, U.S. banks kick off Q1-24 earnings season.
Mainland China releases a deluge of its key macro data.
Across the Pond, stock and bond traders look for confirmation from the European Central Bank (ECB) that a June rate cut is really coming.
Oil prices appear to be on the rise again, clouding the consumer price inflation picture.
This gives monetary policy makers in Canada, New Zealand and Korea food for thought too.
These policy groups update us, as well.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Big U.S. banks report, kicking off Q1-24 earnings season.
Market fixation on U.S. monetary policy will be somewhat diverted in the coming week, as quarterly reports from major banks kick off earnings season.
Following strong fourth-quarter results to end-2023, S&P500 companies are expected to post a +5% year-on-year rise in first-quarter earnings, according to LSEG IBES.
Investors are counting on robust corporate profit this year to support rising valuations as the stock market has rallied to record highs. The S&P500's price-to-earnings ratio is hovering at its highest in about two years.
JPMorgan Chase, Citigroup and Wells Fargo all report results on April 12th. Delta Air Lines and BlackRock are among other notable companies set to provide quarterly updates in the days ahead.
(2) Geopolitics, including oil supply disruptions, put pressure on world oil prices.
Rising geopolitical turmoil and supply disruption in a number of production hot-spots are pushing oil prices back towards $90 a barrel for the first time in months.
Central banks tend to focus on so-called core measures of inflation that strip out energy and food prices. But for businesses on the ground, there's no taking the crude price out of the equation. And the assumption that the U.S. Fed might cut rates by less than its peers has pushed the dollar up almost across the board this year.
That in turn has undermined the purchasing power of big buyers in China, Japan, India and South Korea, raising their energy import bills.
All this complicates life for those countries' monetary authorities, which have either intervened, or threatened to intervene, to prop up their currencies to prevent a vicious-circle type of pickup in inflation.
(3) Mainland China’s stock markets seem to stir, along with that economy.
Promising signs of a long-awaited turnaround in China's economy keep building, helping keep stocks close to multi-month highs into a two-day public holiday from Thursday.
The Shanghai Composite recently enjoyed its biggest rally in a month after data showed the fastest expansion in manufacturing for more than a year. That was followed by even more hopeful numbers showing an acceleration in services activity, hinting that consumer animal spirits might finally be stirring.
The coming days bring a parade of fresh indicators that could support or subvert that optimism: consumer and producer price indexes on Thursday and trade data on Friday.
These will be important litmus tests of consumer appetite. The consumer price index meanwhile will be key since the first rise for six months in the previous batch of data is what helped Chinese stocks scale post-November peaks, though figures were potentially skewed by Lunar New Year holidays.
(4) Thursday, the European Central Bank (ECB) meets. LaGarde presser is key.
The European Central Bank meets on Thursday in what is likely the final hurdle before it starts cutting interest rates.
Traders see a nearly 100% chance of a 25 basis-point cut in June, so a green light is crucial to uphold market sentiment. A flurry of policymakers have explicitly signaled June as the date of a first move. Even Austria's uber-hawk governor Robert Holzmann is not opposed.
Data showing inflation falling unexpectedly to +2.4% in March should give the ECB further confidence.
So, the ECB is very likely to signal rate cuts are coming.
The question is how explicit policymakers will be about June, given they want to review first-quarter wage growth figures that will be released in May.
(5) More central bank decisions arrive, along with the ECB’s calls.
Rate setters elsewhere in the world are sandwiching the ECB: Canada and New Zealand meet on Wednesday, Singapore and South Korea on Friday.
No rate changes are anticipated, but traders want a sense of when rate cuts will come and how policymakers will navigate a delicate balancing act. Markets have trimmed bets for a June Canada rate cut after news the economy grew by 0.6% in January, its fastest growth rate in a year.
New Zealand is in a technical recession but with inflation still above 4.5%, easing is not expected until August.
Singapore is grappling with sticky inflation and the risk of elevated price pressures for longer as recent Taylor Swift concerts fueled service-sector price rises.
And Korea's central bank said in February it was too early to pivot with the path for inflation, at 3.1%, uncertain. Markets only bet on it cutting rates late this year.
Zacks #1 Rank (STRONG BUY) Stocks
(1) CRH (CRH - Free Report) : This is an $85 stock in the Building Products-Miscellaneous industry, with a market cap of $58.3B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
CRH plc manufactures cement, concrete products, aggregates, roofing, insulation and other building materials.
Through its subsidiaries, the company operates in Ireland, the United States, the United Kingdom, Spain, Germany and the Netherlands.
(2) Ford Motor (F - Free Report) : This is an $13 stock in the Domestic U.S. Auto industry, with a market cap of $52.5B. I see a Zacks Value score of A, a Zacks Growth score of F, and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
Ford Motor Company designs, manufactures, markets and services cars, trucks, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles.
Apart from vehicles, the company provides financial services through Ford Motor Credit Company LLC.
Ford has three reportable operating segments:
The Automotive segment is engaged in the design, development, manufacture, sale and service of Ford and Lincoln vehicles as well as service parts, and accessories.
The company's wholesales primarily consisted of vehicles sold to dealerships. It also sells parts and accessories to authorized parts distributors and offers extended service contracts.
The Mobility segment focuses on designing, building, growing and investing in mobility services, and autonomous technology businesses for the company. The segment works as a subsidiary of Ford under the name Ford Smart Mobility LLC.
The Ford Credit segment deals with vehicle-related financing and leasing activities.
(3) JD.com (JD - Free Report) : This is an $26 stock in the Mainland China Internet Commerce industry, with a market cap of $41.2B. I see a Zacks Value score of A, a Zacks Growth score of A, and a Zacks Momentum score of C.
Image Source: Zacks Investment Research
JD.com, Inc. operates as an online direct sales company in China.
The company, through its website www.jd.com and mobile applications offers a selection of authentic products.
It offers computers; mobile handsets and other digital products, home appliances; automobile accessories; clothing and shoes; luxury goods including handbags, watches and jewelry, furniture and household products; cosmetics and other personal care items; food and nutritional supplements; books, e-books, music, movies and other media products; mother and childcare products; toys, sports and fitness equipment; and virtual goods.
JD.com, Inc. is based in Beijing, China.
Key Global Macro
The biggest event is the European Central Bank (ECB) meeting on Thursday. President LaGarde’s presser probably matters the most.
On Monday, the Swiss unemployment gets a refresh for March. The prior month showed a low 2.2% mark. The SNB’s Chair Jordan also gives a speech.
On Tuesday, Japan’s Producer Price Index (PPI) for March comes out. The consensus is for +0.8% y/y, in line with the prior reading of +0.8% y/y.
On Wednesday, New Zealand’s RBNZ (at 5.5%) and Canada’s BoC (at 5.0%) gives up their April rate decisions.
Mainland China updates traders on their FDI flows for March. I see a -19.9% y/y mark from the prior month.
The U.S. CPI for March comes out. The prior broad CPI reading was +3.2% y/y. The core ex-food & energy was +3.8% y/y.
On Thursday, Mainland China’s CPI for March comes out. I see a prior +0.7% y/y reading.
There is an all-day Eurogroup Meeting.
The ECB (at 4.0% with the main refi rate) steps up to bat, with its monetary policy decisions. There is a press conference from ECB President Christine LaGarde, too.
U.S. initial jobless claims are still quite low at 221K. We get an update.
On Friday, Mainland China’s exports for March come out. I see a +7.1% y/y prior mark.
Mainland China’s Import data comes out too. I see a +10.3% y/y prior mark.
University of Michigan consumer sentiment comes out. I see a 79.4 prior mark.
Conclusion
Here are Zacks Research Director Sheraz Mian’s four Q1-24 EPS season points:
(1) Expect S&P500 earnings for Q1-24 to be up +2.5% y/y on +3.5% higher revenues.
This follows the +6.7% y/y earnings growth on +3.9% higher revenues in Q4-23.
(2) Tech and Energy sectors have the opposite effects on Q1-24 earnings growth.
The Tech sector is providing a boost. The Energy sector is pulling it down.
(3) For the Finance sector, total Q1 earnings are expected to be up +3.7% y/y on +2.4% higher revenues.
This would follow the sector’s +12.4% y/y earnings growth on +8.4% higher revenues in 2023 Q4.
(4) For Q1-24, Zacks expects ‘Magnificent 7’ earnings to increase +33.4% y/y on +13.2% higher revenues.
Excluding the Mag 7 Contribution?
Q1-24 earnings for the rest of the S&P500 index would be down -3.2% from the year-earlier period (versus +2.5% growth, otherwise).
The Masters golf tournament starts on Thursday April 11th.
That kicks off Spring in the USA for many golf-crazed traders.
Let’s have a great start to Q1-24 earnings season!
Warm Regards,
John Blank, PhD
Zacks Chief Equity Strategist and Economist