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APRIL 17, 2023

UPCOMING EARNINGS REPORTS TO WATCH THIS WEEK

The earnings season is in full swing, with several top companies releasing their quarterly financial results. Last week, Delta Air Lines, JPMorgan Chase, and Citigroup set the stage for other big names in various industries to report their earnings this week.

Here is the schedule of the biggest reports that get released this week:

Tuesday: Bank of America, Goldman Sachs, Johnson & Johnson (before the market opens); Netflix, United Airlines (after the market closes)

Wednesday: Morgan Stanley (before the market opens); Tesla, IBM (after the market closes)

Thursday: AT&T (before the market opens)

Friday: Procter & Gamble (before the market opens)

RESILIENT STOCK MARKETS

Despite the banking sector’s recent turmoil and instability, the stock markets have been doing well in recent weeks. The Dow has maintained its positive momentum for four consecutive weeks, while the S&P 500 and Nasdaq have had four successful weeks out of the past five. However, with the start of earnings season, investors are keen to gain valuable insights into how businesses interpret recent economic data, suggesting a slowdown.

STRONG PERFORMANCE BY U.S. BANKS BOOSTS EUROPEAN STOCKS

European stocks reached their highest in over a year, as U.S. banks performed well with their first-quarter earnings. This has caused a shift in the mood of U.S. interest rates, as it is now predicted an 81% probability that Federal Reserve may increase rates by a quarter point to 5.0-5.25% in May. Furthermore, at least eight key Fed officials, including three governors, are making speeches this week that could further shape market trends.

OIL PRICES DROP

Oil prices dropped after four weeks of gains due to a strong U.S. dollar and concerns about weak demand. Although the International Energy Agency (IEA) warned of higher future prices due to the production cuts from the Organization of the Petroleum Exporting Countries (OPEC+) starting in May, West Texas Intermediate futures dipped below $82 per barrel. Experts believe that worries surrounding global inflation and demand for oil are the contributing factors to the decrease in prices. Reports indicate that some Asian refiners might cut down on crude processing because of reduced profit margins – a sign of weakening demand. The direction of oil prices in the coming days depends on the first-quarter reporting season in the U.S., China’s first-quarter GDP data, and the Fed’s upcoming policy meeting.

CENTRAL BANKS FIGHT INFLATION WITH RATE HIKES, BUT UNCERTAINTY REMAINS

Major central banks are raising interest rates to fight inflation, but it is not clear if they will be successful as inflation is proving difficult to control. The U.S. Federal Reserve, European Central Bank, and Bank of England are all raising interest rates, but policymakers are uncertain about their projections, and concerned that they may need to do more. Despite this, they believe that inflation will slow down without damaging economic activity. However, experts are skeptical and warn that labor and supply shortages, along with unstable financial markets, may lead to a choice between long-term inflation or a deep recession.


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