Week of April 17

US inflation figures came in pretty much in line with expectations and affirmed the case for at least one more hike from the Fed; the last though. Now attention turns to economic performance, with China's Q1 GDP figures the highlight of the coming week.

Top Events in Review 

After a slow start to trading with holidays in Europe on Monday, traders were cautious ahead of the main event of the week, which was the release of CPI figures from the US and the minutes from the last FOMC meeting. The combination of both events left the market more confident that the Fed would hike at least once more but also affirmed the case for a pending recession later in the year that would justify the market's view of rate cuts. 

As expected, the BOC kept rates on hold, forecasting inflation to come down substantially by the middle of the year. Loonie lost nearly 1.50% by the week's end, with $1.33 judging the next move.

The IMF released its World Economic Outlook, cutting forecasts for global economic GDP growth this year to 2.8% from 2.9% in the prior report. 

BOJ Governor Kazuo Ueda gave his inaugural press release, affirming that YCC will stay in place and commit to the current easing policy. USD/JPY was mixed for another week, trading near 132.00.

Taiwan Semiconductor said it would slow down expansion plans in Taiwan due to a slowdown in the chip market.

Biggest Market Movers

Crude got an additional boost following comments by US Energy Secretary Jennifer Granholm committing to refilling the SPR soon. WTI closed up for the 4th week in a row and reached a nearly 5-month high at $83.60/bbl. Replenishing the reserve was seen as one of the drivers behind the voluntary OPEC cut announced earlier.

Valuation shift continued to drive differences between Nasdaq and DJIA, with megacap tech stocks underperforming while energy firms led bluechips higher. DJIA recorded its 5th consecutive week of gains, closing more than 1.50% higher and tapping the 34k handle.

The Aussie dollar got a double boost through the week, first with the news that China would lift barley import restrictions, and then unemployment figures came in well above expectations. It was hard to get past $0.6775, which remains a problematic resistance for bulls.

Gold prices trended higher as US treasury yields slipped lower in anticipation that the Fed would cut rates before the year was out. Prices hit a 13-month high at $2050/oz, before receding slightly to close the week on a positive footing. 

Top Events in the Week Ahead

Inflation Data Back at Forefront 

The central theme for next week is likely inflation, with the UK, Japan and Canada all reporting their latest figures.

The UK's ONS is likely to report inflation was still in the double digits last month at 10.2% compared to 10.4% prior, keeping the pressure on the BOE to raise once more at its next meeting. The pound recorded a 5th week of successive gains last week but had trouble getting through $1.25; it makes a pullback more likely.

Canada's inflation rate is expected to continue to fall by over a percentage point to 4.1%, with the core rate a little stickier at 4.3%, affirming the BOC's case to keep rates on hold. 

Japan's inflation rate is expected to continue to trend lower despite the BOJ not undertaking any changes to its extraordinary easing, forecast at 3.2% compared to 3.3% prior.

China GDP in Focus

The major event for the coming week is likely to be the release of China's Q1 GDP figures, as traders seek to gauge the strength of the country's rebound after lifting covid restrictions. Quarterly growth is expected to surge to 1.2% from flat in the final quarter of last year, with an annual growth rate of 3.2% compared to 2.9% reported previously.

Other Events and Earnings

Tuesday will see the RBA publish the minutes of its last meeting as well as UK employment figures. Thursday has the Japanese trade balance. Friday includes UK Gfk consumer confidence figures. 

Q1 earnings season is expected to ramp up through the week, with major firms reporting, including Charles Schwab, Bank of America, PageGroup, Netflix Antofagasta, Johnson & Johnson, Tesla, Abbott, Morgan Stanley, Taiwan Semi, AT&T and Procter & Gamble.