Week Ahead: Q1 earnings season kicks off on Wall Street

Earnings season gets underway on Wall Street as the big banks get the ball rolling this week. Meanwhile traders are looking at the latest inflation and retail sales figures from the US and a central bank interest rate decision from New Zealand taking place amid the country’s housing boom. 

Earnings 

 

Coming after fresh record highs for the S&P 500 and Dow and expectations for a major cyclical bounce back for the US economy in Q2 and Q3, this week marks the start of an important corporate earnings season for the market. April is historically a strong month for the market and traders will be looking to corporate updates to power further gains for stocks. However, the market is well priced for earnings to pick up this year already – in fact the 6% rise in the bottom-up EPS estimate for Q1 is the largest on record, according to FactSet. 

Big banks including JPMorgan, Bank of America, Morgan Stanley, Wells Fargo and Citigroup get the season off to the customary start. Financials have been on the up as bond yields rose in the first quarter and the sector has outperformed the broader market. 

In addition to the earnings updates and forecasts for the next quarter, market participants will be paying close attention to what the bank CEOs say about the outlook for the US economy and the recent uptick in bond yields which ought to be supportive of bank earnings. In his annual letter to shareholders sent last week, JPMorgan boss Jamie Dimon was very bullish on the US, saying the economic boom could easily run into 2023. Whilst he called stock market valuations are “quite high,” he said a multi-year boom may justify current levels. 

Inflation 

 

A big question facing the market right now is whether inflation is coming – prices are set to rise on a year-on-year basis as the base effects from the pandemic last year play out. But that is not the same as sustained inflation that could pressure central banks into raising rates before the recovery is complete. US CPI inflation figures are due on Tuesday. Last month’s 0.4% increase was in line with expectations but was the last ‘easy’ data point as base effects are set to take effect now. The Labor Department said its consumer price index increased 0.4% in February after rising 0.3% in January. For March the increase is expected to be markedly higher as sharp price declines at the start of the pandemic last year feed through the calculations. 

RBNZ rate decision 

 

No change expected to the cash rate of 0.25% and there are no updates to forecasts nor a press conference. However, the Reserve Bank of New Zealand meets amid a housing price boom and slowing momentum in economic indicators. The ANZ business survey released on Thursday showed confidence sliding further to –8.4 whilst details on the activity side were flat to weaker. Cost and inflation pressures were said to be ‘intense’ with pricing expectations hitting a new high on data going back to 1992. 

 

Major economic data 

Date  Time (GMT+1)  Market  Event 
Mon 12 Apr  15:30  CAD  BOC Business Outlook Survey 
  18:01  USD  US 10yr Bond Auction 
Tue 13 Apr  Tentative  CNH  China Trade Balance 
  13:30  USD  US CPI Inflation 
  18:01  USD  US 30yr Bond Auction 
Wed 14 Apr  03:00  NZD  RBNZ Rate Statement 
  10:00  EUR  EZ Industrial Production 
  15:30  WTI/Brent  US Crude Oil Inventories 
  19:00  USD  Fed Beige Book 
Thu 15 Apr  02:30  AUD  Australia Unemployment 
  13:30  USD  US Retail Sales 
  13:30  USD  Philly Fed Manufacturing 
  13:30  USD  US Unemployment Claims 
  15:30  Nat Gas  US Natural Gas Inventories 
Fri 16 Apr  03:00  CNH  China GDP 
  13:30  EUR  EZ Final CPI Inflation 
  15:00  USD  UoM Consumer Sentiment 

 

Key earnings data 

14-Apr  JPMorgan Chase & Co.  Q1 2021 Earnings 
15-Apr  UnitedHealth Inc.  Q1 2021 Earnings 
15-Apr  Bank of America Corp.  Q1 2021 Earnings 
15-Apr  PepsiCo Inc.  Q1 2021 Earnings 
16-Apr  Reliance Industries Ltd Dematerialised  Q4 2021 Earnings 
14-Apr  Wells Fargo & Co.  Q1 2021 Earnings 
12-Apr  Tata Consultancy Services Limited  Q4 2021 Earnings 
16-Apr  Honeywell  Q1 2021 Earnings 
15-Apr  Citigroup Inc.  Q1 2021 Earnings 
16-Apr  Morgan Stanley  Q1 2021 Earnings 
15-Apr  Charles Schwab  Q1 2021 Earnings 
15-Apr  BlackRock Inc.  Q1 2021 Earnings 
14-Apr  Goldman Sachs  Q1 2021 Earnings 
17-Apr  HDFC Bank Ltd Registered Shs  Q4 2021 Earnings 
15-Apr  U.S. Bancorp  Q1 2021 Earnings 
15-Apr  BB&T Corp Registered Shs  Q1 2021 Earnings 
16-Apr  PNC Financial Services Group Inc.  Q1 2021 Earnings