Search
EN Down
Language
Hi, user_no_name
Live Chat

Nonfarm payroll data comes this Friday. We’ve seen the US economy surge back to life in March, so we’ll see if the major momentum keeps going.

Rate decisions are on their way too from the Bank of England and Reserve Bank of Australia, but as is the theme for this year, we’re expecting no major changes in direction. It’s still earnings season.

Hundreds of large caps are reporting in on what’s been a bumper quarter for some.

US Nonfarm Payrolls – Can April match March’s blockbuster figures?

April’s Nonfarm payrolls are released on Friday. All eyes will be on the US job market after March’s data blew past expectations, signalling a US economy roaring back to life.

NFPs surged 916,000 in March – smashing the Dow Jones estimate of 675,000. Biggest gains were seen in the leisure and hospitality sector, adding 280,000 new monthly hires.

Construction built on previous month’s success with 110,000 payrolls added in the month. Education experienced a boom upon US school reopenings. Local, state and private education institutions combined to hire 190,000 more employees for the month.

Economic growth signs abound. Business activity is drawing close with pre-pandemic levels, reaching 93.4% on Jefferies JeffData US economic activity tracker. GDP growth prospects are high too.

ISM manufacturing PMI data is also on tap this week, adding to the mix of inbound economic indicators, following excellent performance in March. The index rated 64.7% last month, showing a substantial rise in manufacturing activity compared with last year.

The onus is on sustaining momentum in these vital economic areas.

No change for Bank of England policy this month

Don’t expect any change to monetary policy at the Bank of England’s May 6th meeting, however the much brighter economic outlook certainly points to the Bank being able to wind down its emergency mode earlier.

With QE running at a pace of slightly more than £4bn in gilt purchases weekly, the focus will be on at what point the MPC chooses to signal it will slow this down later this year.

The contraction in GDP in the first quarter was not as bad as feared as the economy showed far greater resilience to lockdown 3 than lockdown 1, whilst the success of vaccinations is becoming abundantly clear and means lifting of all restrictions by June 21st is looking more and more likely.

Therefore, there is a risk that the Bank announces plans to taper asset purchases at this meeting, sooner than the market is maybe anticipating. This would likely be positive for sterling since FX markets continue to under-price MPC hawkishness.

The Bank forecast a 4% decline in Q1 (quarter-on-quarter), however the data so far indicates that the contraction was milder than the February projection. Growth estimates for the full year may well be revised higher from the current 5% level. This may provide ammunition for an earlier taper, however the MPC may prefer to wait longer (say June, when the extent of the reopening will be better appreciated) in order to engineer a steeper taper in the second half of the year.

No cash rate change for RBA but QE extension possible

Mirroring the BOE, The Reserve Bank of Australia is expected not to make any major shifts in policy when Philip Lowe and co. make the month’s rate statement this week.

“The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3%. For this to occur, wages growth will have to be materially higher than it is currently,” said RBA Gov. Philip Lowe said in March’s statement. The rate is staying put at 0.10% for the foreseeable.

Significant gains in employment and a tighter overall labour market are the factors that will force Lowe’s hand. Right now, the RBA doesn’t forecast those returning until 2024 at the earliest.

Instead, we may see an extension to Australia’s quantitative easing programme. Westpac analysts think a third $100bn bond buying regime is on the way, in a move designed to “complement the decision to extend the Yield Curve Control (YCC) Policy to purchase the November 2024 bond at the cash rate of 0.1%”.

Overall, the RBA sentiment is good.

In its March statement, the Central Bank said: “The economic recovery in Australia is well under way and is stronger than had been expected. The unemployment rate fell to 5.8 per cent in February and the number of people with a job has returned to the pre-pandemic level.

“GDP increased by a strong 3.1 per cent in the December quarter, boosted by a further lift in household consumption as the health situation improved. The recovery is expected to continue, with above-trend growth this year and next. Household and business balance sheets are in good shape and should continue to support spending.”

The earnings barrage continues on Wall Street

Large caps are preparing for another Wall Street earnings blitz this week.

So far, it looks like it’s been higher performing quarter for reporting firms across the board. Companies have so far reported aggregate earnings 23.6% above expectations, according to FactSet’s Earnings Insight report dated April 23rd.

Big hitters like Apple and Alphabet have gone and posted strong quarters, although some major tech players like Spotify and Netflix, have seen key subscriber and user metrics underperform.

Looking forward to this week though, there’s an assortment of large caps reporting in. Tech firms PayPal and Square are at the head of the que, as is Covid-19 vaccine pioneer Pfizer. Its vaccine rollout has been instrumental in helping economies return to normality, so we’re likely looking at a successful quarter for the pharmaceutical firm.

See below for a roundup of large cap firms reporting earnings in the week ahead.

Major economic data

Date Time (GMT+1) Currency Event 
Mon 03-May 3.00pm USD ISM Manufacturing PMI 
    
Tue 04-May 5.30am AUD Cash Rate 
 5.30am AUD RBA Rate Statement 
 Tentative AUD Annual Budget Release 
 11.45pm NZD Employment Change q/q 
 11.45pm NZD Unemployment Rate 
    
Wed 05-May 10.00am EUR EU Economic Forecasts 
 3.00pm USD ISM Services PMI 
 3.30pm USD US Crude Oil Inventories 
    
Thu 06-May 12.00pm GBP BOE Monetary Policy Report 
 12.00pm GBP MPC Official Bank Rate Votes 
 12.00pm GBP Monetary Policy Statement 
 12.00pm GBP Official Bank Rate 
 3.30pm USD US Natural Gas Inventories 
    
Fri 07-May 1.30pm CAD Employment Change 
 1.30pm CAD Unemployment Rate 
 1.30pm USD Average Hourly Earnings m/m 
 1.30pm USD Nonfarm Employment Change 
 1.30pm USD Unemployment Change 

Key earnings data

Date Time (GMT+1) Currency Event 
Mon 03-May 3.00pm USD ISM Manufacturing PMI 
    
Tue 04-May 5.30am AUD Cash Rate 
 5.30am AUD RBA Rate Statement 
 Tentative AUD Annual Budget Release 
 11.45pm NZD Employment Change q/q 
 11.45pm NZD Unemployment Rate 
    
Wed 05-May 10.00am EUR EU Economic Forecasts 
 3.00pm USD ISM Services PMI 
 3.30pm USD US Crude Oil Inventories 
    
Thu 06-May 12.00pm GBP BOE Monetary Policy Report 
 12.00pm GBP MPC Official Bank Rate Votes 
 12.00pm GBP Monetary Policy Statement 
 12.00pm GBP Official Bank Rate 
 3.30pm USD US Natural Gas Inventories 
    
Fri 07-May 1.30pm CAD Employment Change 
 1.30pm CAD Unemployment Rate 
 1.30pm USD Average Hourly Earnings m/m 
 1.30pm USD Nonfarm Employment Change 
 1.30pm USD Unemployment Change 

Latest news

Gold price drops on Monday as fears of wider Middle East war subside

Monday, 22 April 2024

Indices

Gold price retreats as fear of Middle East escalation fades

Nvidia stock plunged last week, erasing close to $300bn of the chipmaker’s market cap

Sunday, 21 April 2024

Indices

Nvidia stock leads Magnificent 7 in record weekly cap loss

FTSE 100

Sunday, 21 April 2024

Indices

FTSE 100 index rallies as Wall Street nurses chip losses

Tesla shares poised for 6th straight loss as Cybertruck recalls begin

Friday, 19 April 2024

Indices

Tesla shares drop again as Cybertruck recalls begin

Live Chat