The week ahead | Calamatta Cuschieri

Last week’s recap

The relief from the outcome of the French elections first round, helped investors open their hands and pour around $2.4 billion into European Equities in the week through 26 April. The inflows of funds gathered momentum following the French polls signalling a victory for centrist Emmanuel Macron. This has made European indexes trading in the green area, with the European Stoxx 600 rising the most since December.

On the other side of the globe, the US economy expanded by around 0.7% in the first quarter, which can also be interpreted as the slowest pace in three years. The main culprits have the names of Auto Sales and Lower Home Heating bills, which dragged down consumer spending. This has offset the pickup in investments led by housing and oil drilling. US President Donald Trump has unveiled a paper to cut the corporate income tax rate, wipe most deductions for individuals, eliminate the estate tax and the alternative minimum tax that hits wealthier taxpayers, and throw in some sweeteners for the middle class.

Brexit

In less than 15 minutes, the European Council unanimously adopted its Brexit negotiation guidelines. This shows a remarkable unity amongst the heads of state and the European Union Institutions in negotiating terms. This means that there will be no agreements between individual members and the UK. Members are aiming for a “close partnership” and “strong ties” with the UK. This sought after agreement does not solely aim for trade relationship but also to fight against terrorism and international crime.

This week

Worldwide PMI surveys release for April will provide important signals on global economic and inflation trends at the start of the second quarter, thereby giving an early indication of the direction of growth and future central banks policies. Rate decisions from the US Federal Reserve and Australia’s RBA will dominate the economic calendar, while, the US non-farm payrolls and their traditional prelude also weigh on markets. ECB watchers will meanwhile be eyeing the final PMI data as well as first quarter Euro area GDP, retail sales, producer prices and employment data.

Meanwhile, earnings season grinds on, with tonnes of reports and updates from UK firms, and the US across a multitude of sectors. In the UK, Royal Dutch Shell and BP will be reporting their first quarter results. Both companies are expected to see earnings higher, as a result of Brent crude trading almost 80% higher than the twelve-year lows recorded last year.

In the US, two of the largest pharmaceutical companies will have all eyes on them as Bristol-Myers Squibb holds its annual general meeting and Pfizer reports first-quarter earnings. Worth mentioning big companies like Apple reporting on Tuesday and Facebook on Wednesday.

The French elections will be back under the radar on Sunday as the French return to the polling booths. The majority of the French voters expect centrist Macron to defeat Le Pen in the presidential run-off vote, according to opinion polls. Macron is viewed to secure a comfortable victory in this second round as supporters of the other unsuccessful candidates rally around him to prevent Le Pen from winning. But… never say never ... This can also result in another déjà vu.

Disclaimer:

This article was issued by Rodrick Duca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.