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APRIL 10, 2023

U.S ECONOMY BOOSTED

The U.S. economy has been uplifted by a surprising drop in unemployment and an ongoing trend of steady hiring figures. This has boosted confidence for those who believe that minor setbacks will be the only challenge to face this year. Although there seemed to be a slowdown in March, recent non-farm payrolls figures suggest that the jobs market remains strong, with unemployment dropping to the lowest levels in over 50 years. However, there is still some worry about the potential tightening of bank lending due to the recent shake-up, leaving speculation about how or when this will influence job markets, salaries, and consumer spending.

GLOBAL CENTRAL BANKS EXPECTED TO END INTEREST RATE HIKES

Central banks across the world have been actively increasing interest rates, but now this trend looks to be coming to an end. The Federal Reserve is expected to pause interest-rate hikes after May due to signs of stalling economic growth and ongoing tension in financial markets. The European Central Bank may continue its restrictive settings for a while, but the significant shift in U.S. monetary policy led by Fed’s chair Jerome Powell could set a precedent for other global central banks to follow.

OIL PRICES STEADY

Oil prices remained relatively stable at the start of this week as traders analyzed the potential supply risks after the Organization of the Petroleum Exporting Countries (OPEC+) decided to reduce production. This decision has led to a boost in optimism for higher oil prices. However, there are still concerns about lower demand because of slow economic growth. OPEC+ and the International Energy Agency are set to provide traders with valuable insights this week as they release monthly outlooks.

LOWER QUARTERLY EARNINGS

Wall Street banks are expected to report lower quarterly earnings due to the recent regional banking crisis and a slowing economy. Recent estimates suggest that earnings per share for the six largest U.S. banks will be down about 10% from last year. Nevertheless, some analysts believe that JPMorgan Chase & Co may come out ahead as the bank’s net interest margin was higher than some of its competitors. The larger banks were able to benefit from access to cheap deposits due to the collapse of Silicon Valley Bank, but experts warn that subdued loan growth and the risk of souring credit conditions could make it a challenging earnings season for them. Banks may need to add to provisions against potential losses and implement liquidity measures, which could potentially lead them to face downward revisions to their net interest income.

DECLINE IN PC SHIPMENTS

The demand for personal computers has dropped significantly due to a decrease in remote working equipment. Apple’s PC shipments fell by more than 40%, alongside a 29% decline for other PC makers in the first quarter of this year. This fall in demand appears to be giving manufacturers the time needed to make changes as many factories increasingly explore production options outside China. Apple, in particular, is looking for more alternatives to China due to the brewing political tensions between the U.S. and Beijing, which may affect the company’s supply chains.

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