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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Asia week ahead: earnings, US GDP watch

Against the backdrop of receding risk sentiment, earnings played a key part in aiding the recovery of equity markets this week. 

Bank of Japan
Source: Bloomberg

While the momentum did falter into the end of the week, the focus is only expected to intensify further next week alongside central bank meetings and tier-1 data releases.

Earnings watch

With US earnings season underway and the impact seemingly trickling down to Asian markets, next week promises to be a significant one for global equity markets. Approximately 35% of the companies on the comprehensive S&P 500 index will be due to deliver their earnings report and amongst which, names such as Alphabet, Microsoft, Amazon.com and Facebook are just few of the many highlights that would occupy our attention. Of the 15% that had reported thus far, we have certainly seen a pleasing 88% that had either met or exceeded consensus, though the impact had been rather limited for a cautious market. With the highlights that are expected next week, including multiple FANGs, further gyrations for equity markets would have to be watched.

Central bank meetings

Unfolding alongside the extensive set of earnings will be central bank meetings in Europe and Japan. Both central banks are, however, expected to remain status quo with their hands bound by the recent bout of soft data in both regions. Weak industrial activity in the Eurozone and subdued inflation in both the Eurozone and Japan had been seen of late, prompting little expectations for hawkish rhetoric to arrive, downplaying the event risks. Alongside the Bank of Japan meeting, the release of the central bank’s outlook of economic activity and prices will also be one to parse through, though the room to surprise may similarly be limited. These come ahead of the 1-2 May Federal Open Market Committee (FOMC) meeting, leading to a lack of Fed talks in the upcoming week on account of the blackout period, keeping our attention on corporate earnings.

Economic indicators

Over and above the abovementioned slew of events to note for next week, several key data would also play their part in guiding markets including the first quarter growth figures from the US. The first reading of US Q1 GDP will be seen on Friday after Asia hours with the market consensus pointing to a moderation in growth to 2.0% quarter-on-quarter (QoQ), one to watch for impact and reactions for equity bourses. Other US data includes April consumer confidence, new and existing home sales and March trade balance. 

For the Asia-Pacific region, the end of the month finds primarily Japanese data likely to occupy headline with Japan’s inflation, employment and retail sales all due on Friday. Preliminary April Nikkei PMI will also be seen on Monday as with the releases of Markit PMIs for the Eurozone and the US thereafter, early indications on manufacturing conditions from advanced economies. Notably, the two Koreas are also expected to convene for the first summit after more than a decade on Friday that would be of interest to risk trades.

The local Singapore market will find a couple of earning releases such as that from Venture Corp. on Wednesday. Monday’s inflation and Thursday’s industrial production have also been lined up in the week.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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