Sharechat Logo

World Week Ahead: US rates move back in focus

Monday 22nd February 2016

Text too small?

Investors will watch this week’s speeches by US Federal Reserve officials with extra intent after economic data on the country’s inflation, jobs and even manufacturing suggested the central bank might hike interest rates sooner than thought. 

A slew of policymaker scheduled to speak in the coming days include Fed vice chair Stanley Fischer on Tuesday, Richmond Fed president Jeffrey Lacker, Dallas Fed boss Rob Kaplan and St Louis Fed’s James Bullard on Wednesday, Atlanta Fed’s Dennis Lockhart and San Francisco Fed’s John Williams on Thursday, and Fed governors Jerome Powell and Lael Brainard on Friday. 

A report last Friday showed that the US consumer price index, excluding food and energy, climbed by 2.2 percent over the past year, the biggest acceleration since June 2012. That came after an unexpected drop in weekly jobless claims, and better-than-expected data on manufacturing.

"I think what’s happening is that people are starting to put tightening back on the table," Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, told Reuters. 

This week also offers a fresh take on the US housing market, which recently had showed some weakness in its recovery. First there are reports on the S&P Case-Shiller home price index and existing home sales on Tuesday, followed by new home sales on Wednesday, and the FHFA house price index on Thursday.

The economic calendar also offers data on the Chicago Fed national activity index, and the PMI manufacturing index, due today; consumer confidence, and the Richmond Fed manufacturing index, due Tuesday; PMI services, due Wednesday; durable goods orders, weekly jobless claims, and the Kansas City Fed manufacturing index, due Thursday; as well as gross domestic product, personal income and outlays, and consumer sentiment, due Friday. 

Companies set to report their latest earnings this week include Macy’s, Home Depot, Target, Lowe’s, Chesapeake Energy, Kohl’s, and Gap.

The latest US earnings proved mixed. Shares of Applied Materials shares soared 7.1 percent on Friday after the chip equipment provider posted solid earnings, as well as a favourable estimate for the current quarter.

On the flip side, shares of Nordstrom sank 6.7 percent after the luxury department chain reported quarterly profit and a full-year outlook that fell short of the mark, while shares of Deere & Co dropped 4.1 percent as the maker of farm machinery downgraded its fiscal-year sales and profit outlook.

But sentiment continues to fluctuate with the price of oil. Saudi’s oil minister will speak at an industry conference in Houston on Tuesday, following a deal with his Russian counterpart to freeze their respective output at January’s, albeit record, level. While crude gave up some of its gains on Friday, it still finished the week with an advance.

Stocks breathed a sigh of relief. For the holiday-shortened four-day week, the Dow Jones Industrial Average gained 2.6 percent, while the Standard & Poor’s 500 Index climbed 2.8 percent, and the Nasdaq Composite Index advanced 3.9 percent.

“What we need to see is the market shift from a focus on oil being the harbinger of an economic slowdown to the US consumer data, which seems to be improving with every release,” David Schiegoleit, managing director of investments in Newport Beach, California, at the Private Client Reserve of US Bank, told Bloomberg. 

“That could turn lower oil prices from a headwind into a tailwind,” Schiegoleit noted. “The market has not been trading off of fundamentals. The market has been trading off of fear and trying to read the tea leaves of falling oil prices.” 

In Europe, the Stoxx 600 Index climbed 4.5 percent last week.

One key event this week will be Bank of England Governor Mark Carney’s testimony to UK lawmakers on the economy and monetary policy, scheduled for Tuesday. The next day Germany’s Bundesbank is scheduled to publish its annual report.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite

IRG See IRG research reports