Key events to watch in the week ahead: 17-21 April 2023
While the US earnings season kicks in, what are some of the key events to watch next week?
This week’s overview
Expectations for a potential rate pause after the Federal Reserve’s (Fed) May meeting have been validated this week, which forces the US dollar back towards its 2023 low, while lifting gold prices to its highest level since March 2022. Recession concerns continue to linger on investors’ minds, but for now, the prospects of an impending end to the Fed’s hiking cycle are sufficient to spur a risk-on environment, with the VIX trading firmly below its key 20 level this week.
Attention will be shifted towards the US earnings season next. The corporate earnings outlook may be far from rosy, but downbeat expectations could still provide a low hurdle for outperformance. Other than that, a series of economic data out of China will be in focus for the upcoming week as well, along Singapore’s March exports number.
Here are some of the key events to watch next week:
17 April 2023 (Monday, 8.30am SGT): Singapore’s March non-oil exports
The worst may not be seen for Singapore’s export sector yet, as intensifying risks to global growth continue to put pressure on external demand. February’s export reading has marked the fourth consecutive month, where exports have seen a double-digit decline. This is in line with other weak export numbers across the region as global demand falters. The trend is expected to remain, with Reuters poll looking at a 20.8% year-on-year decline in Singapore’s March exports next week.
A weaker-than-expected reading could likely weigh on the SGD further, reinforcing recent guidance from Singapore’s central bank that ‘the domestic economic slowdown could be deeper than anticipated’. However, it may have to take much more to overturn the downtrend in the USD/SGD, which is struggling to move back above a Fibonacci resistance at the 1.324 level. The formation of a new lower low reiterates its ongoing bearish bias for now.
18 April 2023 (Tuesday, 10am SGT): China’s economic data (Q1 GDP, industrial production, retail sales, fixed asset investment)
Subdued pricing growth and below-forecast factory growth activities have left some doubts on the strength of China’s economic recovery despite reopening, with the upcoming data to provide fresh update on its progress. First-quarter gross domestic product (GDP) is expected to grow at 4% year-on-year and 2.2% quarter-on-quarter, which may mark a positive step towards its growth target of around 5% for 2023. That said, some may argue that a 5% target following a low base in 2022 is underwhelming and are still expecting to see some outperformance. Retail sales will be on watch to do some heavy-lifting for growth, but industrial production may be more tepid for being dependent on external demand.
Signs of a stronger recovery may be supportive of Chinese equities, as we have seen with the positive reaction to better-than-expected trade figures this week. For the Hang Seng Index, the 20,900 level will be a key resistance to overcome, where a Fibonacci confluence zone stands. Any successful move above the level may pave the way to retest its 2023 high at the 22,900 level next.
17 – 21 April 2023: US earnings season
The US earnings season will shift into higher gear next week, with focus on results from US major banks (BAC, GS, MS), followed by Netflix and Tesla, which will set the stage for tech earnings. Based on FactSet, S&P 500 earnings are expected to decline by 6.8% from the previous year, which will mark the largest earnings decline by the index since quarter two (Q2) 2020. While market expectations remain relatively downbeat, one may argue that it provides a low hurdle for outperformance as well, which could provide legs for the recent rally with any positive surprises.
17 April 2023 (Monday): China’s one-year Medium-Term Lending Facility (MLF) policy rate
20 April 2023 (Thursday): China’s one-year and five-year loan prime rate
The upcoming week may also bring about a series of policy decisions from China, where subdued pricing pressures provide the room for further easing to lift growth if required. However, given that reopening efforts are largely at play, a rate cut from the People's Bank of China (PBoC) may instead trigger worries that the recovery is not as optimistic as initially expected. Consensus may be for a no-change once more. Lowering its growth target to only about 5% in 2023 may suggest that the authorities are willing to tolerate a lower-growth environment, which may reduce the odds of further monetary easing.
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