What happens across this packed Global Week Ahead?

This week combines the big three obsessions for investors, right now – 

• The “AI” boom gets key EPS reports
• The future paths of policy rates emerge, and
• The war in Iran continues

Four of the world's top central banks meet, wondering how long they can realistically look through the spike in global energy prices due to the blocked Strait of Hormuz, while five of the so-called "Magnificent Seven" U.S. tech giants report their earnings.

Next are Reuters five world market themes, re-ordered for equity traders—
 

(1) Five of the “Mag 7” tech mega-caps report earnings, and supply outlooks.

Reports from five of the so-called "Magnificent Seven" mega-cap tech companies headline a deluge of first-quarter earnings this week.

It comes at a time where almost unshakable investor optimism about AI-driven profits is providing a critical support for near-record high equity indexes.

On Wednesday alone, reports are due from Alphabet (GOOGL Quick QuoteGOOGL - Free Report) , Microsoft (MSFT Quick QuoteMSFT - Free Report) , Amazon (AMZN Quick QuoteAMZN - Free Report) and Meta (META Quick QuoteMETA - Free Report) — four "hyperscalers" now spending billions on data centers and other high-tech infrastructure.

iPhone maker Apple (AAPL Quick QuoteAAPL - Free Report) , reports the day after, ‌hot on the heels of news that it has picked longtime hardware boss John Ternus to take over the CEO reins from Tim Cook, 15 years after he took over from Apple's co-founder Steve Jobs.

It is not just tech though.

More than a third of the S&P 500 are reporting this week, including weight-loss drugmaker Eli Lilly (LLY Quick QuoteLLY - Free Report) , oil major Exxon Mobil (XOM Quick QuoteXOM - Free Report) and credit card giant Visa (V Quick QuoteV - Free Report) .
 

(2) Wednesday, the U.S. FOMC April meeting ends. Expect no policy rate change.

The world's most influential central bank, the Federal Reserve, is expected to keep U.S. interest rates steady on Wednesday, meaning it will mostly be about its signals for the months ahead given most economists think cuts are off the table for now.

An intriguing subplot is whether this will be Jerome Powell's last meeting in charge, or even if he attends in the future, given his broader stint as a Fed governor — which runs until 2028 — is also under attack.

The 73-year-old's term as Fed Chair is due to end next month, so this should be his swansong.

But a key U.S. senator is vowing to block Trump's pick for Powell's successor — former Fed governor Kevin Warsh — until a probe into Powell's renovations of the Fed's headquarters is dropped.

There will be some key data to digest, too.

First-quarter GDP and then March Personal Consumption Expenditures (PCE) price index — the Fed's preferred inflation gauge — are both due out on Thursday.
 

(3) Thursday, the European Central Bank (ECB) & Bank of England (BoE) meet.

Both the European Central Bank and Bank of England are tipped to leave their respective 2% and 3.75% key interest rates steady on Thursday, having both deliberately dampened bets of pre-emptive hikes over the last fortnight.

The shaky Iran war ceasefire has earned a bit of breathing space of sorts, but with oil already back above $100 again, money markets still anticipate both will have hiked twice before the year is out.

Optionality will be the watchword. ECB chief Christine Lagarde will be pressed on just how likely a pre-summer increase is. She certainly will not want a repeat of the hike-too-early error another French ECB chief, Jean-Claude Trichet, oversaw just before the eruption of the Eurozone crisis.

For the BoE in London, Governor Andrew Bailey has already warned markets they are getting ahead of themselves and given how nervy domestic politics is making gilt markets, he is walking a tightrope too.
 

(4) Tuesday, the Bank of Japan (BoJ) meets.

The Bank of Japan completes the list of major central banks in action.

Its meeting on Tuesday will start the procession and, just like in the U.S. and Europe, what had appeared to be a window for a rate hike, now looks like another one to sit on its hands.

Sources have told Reuters Kazuo Ueda and co are likely to need more time to assess the fallout from the Middle East war, but observers expect them to leave the door wide open for a hike in June.

Some are worried that they may be getting behind the curve. Even the head of the Asian Development Bank has warned that the yen could come under further pressure if markets think the BOJ is being too slow given the inflationary risks.

For now, the Japanese currency continues to languish near 160 to the dollar. That is a level investors have long viewed as a potential trigger point for FX market intervention.

They are still waiting, though.
 

(5) Can diplomatic progress be made — in the 9th week of the Iran war?

This week, like the eight weeks that ‌have gone before it, will be dominated by whether progress can be made in the Iran war and reopening the Strait of Hormuz, the maritime chokepoint that is now the key power-play in the conflict.

Iran has been flaunting its tightened grip over the shipping corridor and though there has been some relief that Washington and Tehran and Israel and Lebanon have extended respective ceasefires, the fact oil is well over $100 a barrel again shows just what the markets think.

Diplomacy, any sign of back-channel talks and U.S. President Donald Trump and Iran's Supreme Leader Ayatollah Mojtaba Khamenei's social media posts will all continue to drive volatility, especially with Trump now saying he will not be rushed into a deal as he wants something that is “everlasting.”

The prolonged conflict is also deepening the fissure between the U.S. and NATO.

Trump has repeatedly criticized the alliance's members for failing to support his attacks on Iran and Washington is now weighing punishing "difficult" countries, such as Spain, according to officials.
 

Zacks #1 Rank (STRONG BUY) Stocks

Next are three Zacks #1 (STRONG BUY) large cap stocks, benefitting last week, from fresh covering analyst earnings upgrades.

(1) Bloom Energy (BE Quick QuoteBE - Free Report) : This is a $236 a share alternative energy stock, with a market cap of $64.5B.

It is found in Zacks Alternative Energy-Other industry. The stock holds a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of F.

F12M P/E: 160.0.
 

Image Source: Zacks Investment Research

Bloom Energy Corp. generates and distributes renewable energy.

Bloom Energy stands out in the clean energy sector — primarily due to its unique approach to Solid Oxide Fuel Cell (SOFC) technology.

While many fuel cell companies focus on hydrogen and transportation, Bloom has carved out a niche in high-efficiency, on-site stationary power for commercial and industrial use.

Bloom Energy is based in CA, United States.

(2) Disco Corp. (DSCSY Quick QuoteDSCSY - Free Report) : This is a $45 a share manufacturing stock, with a market cap of $52.8B.

It is found in the Zacks Manufacturing-Material Handling industry. The stock holds a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of F.

F12M P/E: 45.5.

DISCO Corp. manufactures and sells precision cutting, grinding and polishing machines primarily in Japan and internationally.

Its precision machines include dicing saws, laser saws, grinders, polishers, wafer mounters, die separators, surface planers, and waterjet saws, as well as products for dicing before the grinding process and package singulation.

The company also manufactures and sells precision diamond abrasive tools; and offers processing services.

DISCO Corp. is headquartered in Tokyo, Japan.

(3) Alcoa (AA Quick QuoteAA - Free Report) : This is a $65 a share aluminum stock, with a market cap of $18.1B. 

It is found in the Zacks Metal Products-Distribution industry. The stock holds a Zacks Value score of C, a Zacks Growth score of F, and a Zacks Momentum score of A.

F12M P/E: 9.0.
 

Image Source: Zacks Investment Research

Alcoa is a global industry leader in bauxite, alumina and aluminum products.
 

Key Global Macro

On Monday, the Bank of Japan (BoJ) sets monetary policy. There is a presser.

On Tuesday, Australia’s trimmed mean CPS for March comes out. The prior read was a hot +3.3% y/y rate. The broad CPI was +3.7% y/y.

On Wednesday, there is a Bank of Canada (BoC) and a FOMC policy rate decision.

There will be a Chair Powell presser, too.

The current 3.75% FOMC policy rate should remain in place. In comparison, the current BoC policy rate is 2.25%.

On Thursday, the Euro Area core HICP inflation rate for April comes out. The prior reading was +2.3% y/y. Note: this is a first post-Iran conflict inflation print here.

The Bank of England (BoE) sets its monetary policy. They are at 3.75%, too.

The European Central Bank (ECB) also sets monetary policy. They are at 2.15% on their main refi rate.

On Friday, since it is May 1st, the ISM manufacturing PMI for April comes out. 52.7 was the prior reading.
 

Conclusion

This week, in particular, Q1 earnings reports will remain a major trader focus.

On April 22nd, Zacks Research Director Sheraz Mian shared a Q1 EPS update —

Four key points:

(1) The picture emerging from the Q1 earnings season is of continued strength and momentum, with companies not only comfortably beating consensus estimates but also providing a reassuring read on the economy despite elevated energy costs and other risks.

The momentum is particularly notable on the revenues side, both in terms of the growth pace as well as the beats percentages.

(2) Total Q1 earnings for the 86 S&P 500 companies that have already reported results are up +26.1% from the same period last year on +10.3% higher revenues.

76.7% beat EPS estimates and an equal proportion beating revenue estimates.

(3) The earnings and revenue growth rates, and revenue beat percentages, for these companies are notably above recent historical averages.

The Q1 EPS beats percentage, however, is tracking below the 5-year average for this group of companies.

(4) For the Finance sector, we now have Q1 results from 52.6% of the sector’s market capitalization in the S&P 500 index.

Total earnings for these companies are up +24.7% from the same period last year on +12.4% higher revenues, with 76.7% beating EPS estimates and 63.3% beating revenue estimates.

These Q1 results compare favorably with what we have seen from this same group of companies in other recent periods.

Enjoy the trading week.

John Blank, PhD.
Zacks Chief Equity Strategist and Economist