Markets finished the week in buoyant form again on Friday as investors continued to focus on positive sentiment rather than the escalating hostilities in the Middle East. Stocks and overall risk had remained resilient throughout the week despite the end of the ceasefire between the US and Iran and daily updates of missile and drone strikes from both sides.
Earnings season kicks off again this week, and investors have high hopes for more stellar updates, especially from the tech sector. These reports will influence sentiment strongly, alongside some key fundamental updates and a likely deluge of geopolitical news that will hit the market as the week progresses.
The latest update, just hours before the start of the new trading week, is that Iran is claiming that it has again closed the Strait of Hormuz. The US has responded with hundreds of strikes against Iranian targets, while Iran is again hitting US-allied Gulf states, so traders are now expecting a volatile start to the trading week, with potential gapping in FX and Oil contracts likely.
Here is our usual day-by-day breakdown of the major risk events this week:
It is a very quiet start to the trading week on Monday, with little of note out across all three trading sessions. We do hear from Fed members Waller and Bowman later in the day, but expect any fresh geopolitical updates to dictate sentiment.
The event calendar kicks in on Tuesday, although not until later in the day, with the Asian session looking relatively quiet. The London session will see a focus on UK markets, with Bank of England Governor Andrew Bailey set to speak before the Treasury Select Committee. However, the main event of the day, and perhaps the week, comes early in the New York day, with the US CPI numbers set for release. Later in the session, we also hear from Fed Chair Kevin Warsh when he testifies in Washington.
There is little of note in the first two sessions on Wednesday; however, again, the US session looks a busy one. First up, we have more inflation data out of the US, with PPI figures due out, before focus moves north to Ottawa for the Bank of Canada’s latest interest rate update. We also hear from Kevin Warsh again when he completes day 2 of his testimony before the Senate.
It is another relatively busy day on Thursday, although again there is nothing to excite traders in the Asian session. The London session will again see a strong focus on the UK, with key GDP data due out early in the piece. There is a big US data dump early in the New York session, with Retail Sales, the Weekly Unemployment Claims, and the Philly Fed Manufacturing Index data all due out at the same time, while we also hear from Fed members Logan, Schmid, and Jefferson later in the day.
It is a much quieter calendar day to close out the week, with nothing of note in the first two sessions of the day and just the Preliminary University of Michigan Consumer Sentiment and Inflation Expectations numbers in the US day.
