With the long-awaited White House tax plan failing to enthuse markets, investors will be turning their attention to US jobs data, the Federal Reserve meeting and Brexit talks next week.
Here’s what to watch in the coming days.
The Federal Reserve begins its two-day monetary policy setting meeting on Tuesday with an announcement due the following day. Economists expect the central bank to leave interest rates unchanged next week, with many expecting the central bank to next lift interest rates in June.
Wednesday’s announcement will not be followed by a press conference with chair Janet Yellen and investors are likely to parse the statement for clues on the Fed’s assessment of inflation, labour market slack, and risks to the economic outlook. With the Fed projected to raise interest rates at least twice more this year, focus has turned to when the Fed will begin winding down its $4.2tn balance sheet. But next week is unlikely to provide the market with additional details on changes to balance sheet policy.
Markets also await remarks from Fed vice-chair Stanley Fischer and Chicago Fed president Charles Evans, both voting members of the monetary policy setting FOMC, who are scheduled to speak on Friday. Mr Evans will join James Bullard and Eric Rosengren on a policy panel at Hoover’s Monetary Policy Conference held in Stanford, California.
Bank of Canada’s governor Stephen Poloz will be speaking in Mexico City on Thursday as a time when both nations are seeking to renegotiate the North American free trade agreement.
“While the near-term outlook remains upbeat, Governor Poloz is likely to maintain a cautious tone amid a sharp increase in protectionist rhetoric from south of the border, which was deemed the most salient risk in the April MPR,” strategists at TD Securities, note. “His speech is likely to focus on international trade and could provide insight into potential US policies and their impact on the Canadian economy.”
Fed officials – along with the wider markets – will be watching the US jobs report due Friday. Economists expect hiring to rebound with the US economy creating 193,000 jobs in April, following a lackluster 98,000 jobs the previous month.
The unemployment rate is expected to tick up to 4.6 per cent, from 4.5 per cent previously, while wage growth is estimated to have improved. Economists forecast that average hourly earnings rose 0.3 per cent from March but climbed 2.7 per cent year-on-year, unchanged from the previous month’s pace.
While the jobs report is the hallmark economic event next week, investors will also be parsing manufacturing data out earlier in the week as Donald Trump has made reviving American manufacturing a focal point of his presidency.
Apple, the world’s largest publicly listed company, is slated to report its fiscal second quarter results after the market close on Tuesday. Investors will be watching for the latest iPhone unit sales. Meanwhile, Wall Street is looking for the company to report adjusted earnings of $2.02 a share on a near 5 per cent bump in net sales to $53bn.
While Apple results are always closely-watched and investors will also keep an eye on possible updates to the company’s share buyback plan, UBS notes that “most investors are focused on fiscal 2018, which means the next few reports should be less important than usual”.
But Apple is just one of more than 120 companies listed on the S&P 500 that are slated to report results next week, including Pfizer, Coach, ConocoPhillips, Kraft Heinz, Motorola and Berkshire Hathaway.