Week ahead: Apple earnings land as Fed seen holding rates

Earnings seasons continue apace on Wall Street with updates from Amazon and Apple among the highlights. There’s also a mix of Dow Jones index components, big pharma and crypto-related companies on tap this week.

On the macro front, the Federal Reserve is expected to remain steady with rates on Wednesday but will likely set out the chances of a cut in June, which have tumbled in recent weeks. Nonfarm payroll data from the US provides the main economic release of the week on Friday.

Here are the week’s key events:

Monday, April 29: German Inflation Data

Asian markets may be a tad quieter than usual with a Japanese bank holiday. The focus in the European session is the latest round of German inflation data. CPI stood at +2.2% in March 2024, down from +2.5% in February and +2.9% in January.

The inflation rate in March was at its lowest level since May 2021. Falling energy prices, which declined 2.7% year-over-year in March, are favourably impacting the data. More recent PPI data also showed promise at -2.9% in March. The inflation data continues to point to the European Central Bank cutting rates in June.

Earnings: MicroStrategy (MSTR)

Tuesday, April 30: China PMIs, Eurozone CPI Inflation

Asian markets kick off with fresh PMIs from China. The manufacturing survey rose back into expansion territory for the first time since September after five straight months of contraction.

It rose to 50.8, its best in a year, amid signs of a slowly building recovery in the world’s second-largest economy; although the National Bureau of Statistics warned companies are still suffering from “insufficient market demand”. The services survey expanded further as well.

Eurozone CPI inflation data for April follows, which could steady after declining to 2.4% in March from 2.6% in February. The US employment cost index will offer a guide to productivity levels, while traders may also keep an eye on the Chicago PMI, Canada GDP and the CB Consumer Confidence reports.

Earnings: 3M (MMM), Coca-Cola (KO), Eli Lilly (LLY), McDonald’s (MCD), Starbucks (SBUX), Advanced Micro Devices (AMD), Amazon (AMZN), Pinterest (PINS)

Wednesday, May 1: Federal Reserve Policy Meeting

May Day holidays will keep liquidity a bit thin in places but there is plenty in terms of the U.S. to keep things interesting. The Federal Reserve will stand pat on interest rates but clues as to what it does next will be eyed. Markets have all but priced out a June cut and are now seeing a chance that the Fed’s next move is to hike.

Markets will be carefully listening for what Jay Powell has to say about whether rates are still expected to be cut three times this year. A slew of economic data precedes the meeting statement – ADP employment, ISM manufacturing PMI and JOLTS job openings among them. Later on, New Zealand employment data is due up.

Earnings: Barrick Gold (GOLD), Mastercard (MA), Pfizer (PFE), Etsy (ETSY), Qualcomm (QCOM)

Thursday, May 2: Apple Earnings

It’s all about Apple earnings today with the focus on China sales and what new products are in store on May 7th.

Apple iPhones fell 19.1% in the first three months of the year, according to data from Counterpoint Research, which also reported Chinese rival Huawei saw a 69.7% rise in smartphone sales in the country. Apple stock has fallen around 10% this year and recently broke its Oct 2023 lows.

Analysts have sounded cautious about the Apple earnings call, with Barclays outlining: “We see an in-line Mar-Q[uarter]. We expect the June-Q guide will miss Street estimates due to softening hardware demand, which would continue a multi-quarter trend for AAPL.”

Morgan Stanley also said the June revenue guidance would be light and lowered its price target on the stock to $210 from $220.

Earnings: Apple (AAPL), Moderna (MRNA), Novo Nordisk (NVO), Block (SQ), Coinbase (COIN)

Friday, May 3: Jobs Day in the U.S.

It’s Jobs Day! This is going to be important for rates markets in the wake of the Fed meeting so could generate some volatility. The jobs market has so far remained very strong and continues to act as a deterrent to the Fed’s plans to cut rates.

Nonfarm payrolls rose by 303,000 in March, beating expectations for a gain of 200,000, though the 275k reading from February was revised lower to 200k. Unemployment and wage growth edged a bit lower. The report pushed out expectations for the first Fed rate cut, enabling the dollar to extend its run higher.

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