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Next week investors will perform a juggling act as earnings season vies for attention alongside updates on the health of the US economy and the Federal Reserve’s beige book. Here’s what to watch in the coming days.
Geopolitics remain in focus as Turkey holds a referendum on Sunday on key constitutional amendments that aim to replace the country’s parliamentary system with an executive presidency in a move that would consolidate President Recep Tayyip Erdogan’s power. The most recent polls suggest the outcome of the referendum is too close to call.
The vote comes after a failed coup attempt last year that saw the Turkish president declare a state of emergency. Ankara also faces deepening security threats following a wave of terrorist attacks. All of these events have combined to sap investor and consumer confidence and taken a toll on the lira.
Nafez Zouk, senior economist at Oxford Economics, expects a yes vote. He said: “Elections are likely under either outcome, but a ‘yes’ vote would mean that these would be less disruptive to economic policy, which we expect Erdogan will prioritise in H2 2017 once he has cemented his power. A ‘no’ vote, on the other hand, would lengthen the period of political uncertainty and lead to a selloff in Turkish assets.”
The market for new homes is expected to have cooled in March, with economists estimating that US housing starts declined 2.2 per cent last month to an annualised pace of 1.26m units, from the previous month, when they climbed 3 per cent. However, permits to build homes are expected to have climbed 3.4 per cent to an annualised pace of 1.26m units following a 6 per cent drop in February.
A separate report due Friday is expected to showed that sales of previously owned homes, which account for a much larger share of the market, inched up 1.3 per cent last month to an annualised pace of 5.55m units.
Meanwhile, economists anticipate that US industrial production, a measure of everything made by factories, mines and utilities, rose 0.5 per cent in March from the previous month when it was flat. An unseasonably warm winter had weighed on demand for home and office heating, as well as utilities production. Investors will be watching for any giveback on that front and for signs that US manufacturing is gathering momentum.
With some of America’s biggest banks kicking off earnings season on an upbeat note, investors will watch as 68 companies listed on the S&P 500 report first-quarter results. Bank of America, Goldman Sachs, Netflix, Harley-Davidson, Yahoo, Johnson & Johnson and US Bancorp and others are on the agenda.