Next week, the largest market events will center on inflation, with Australia and the European Area updating the market as to their respective rising consumer prices.
Australia’s quarterly inflation report is due this coming Wednesday. The country has been curiously immune to the worst inflationary pressure seen elsewhere, like the US (8.5%), the UK (7%), and across the ditch in New Zealand (5.9%).
As recorded in the previous quarter, Australia’s inflation rate stands at 3.5%. However, it is not expected to remain so low in the next reading. It is likely to be the last inflationary figure before the Reserve Bank of Australia (RBA) moves to increase its interest rate. When the RBA does make this move, it will be the first of its kind in more than a decade.
Expectations are for a 50 basis point hike by the RBA in May, but has the market priced this into the Australian dollar yet?
The AUDUSD is trading a 0.745, after retracing some of the ground it made after releasing the minutes from the RBA’s last meeting, where it became apparent that the bank is ready to take its foot off the gas.
Inflation in the European Area is at an all-time high as of its last reading in March. YoY inflation in the EA surged to 7.5% from 5.9%, massively overshooting expectations of an already significant rise to 6.6%.
Aprils reading is expected to produce a fifth consecutive record inflation figure, in congruence with notes made by Christine Lagarde, head of the European Central Bank (ECB).
Lagarde is anticipating energy prices to remain elevated in the medium term. Even so, and perhaps imprudently, the ECB is not likely to start raising rates soon.
Perhaps it is wise to consider this another mark against the strength of the Euro, a currency that has been recently grappling with the risk-off environment instigated by Russia’s invasion of Ukraine in February.
Additionally, we will be graced with earnings reports from everyone’s favourite tech giants. Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFTL), Alphabet (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), and Meta (NASDAQ:FB) will all supply the market with their latest market-moving notes over the course of the week.
Alphabet and Microsoft are first to report, on April 26, followed by Meta on April 27 and Apple and Amazon on April 28. Considering the considerable turmoil that their last earnings reports caused in the market, investors may be cautious of a repeat. Famously, Meta set the record for the largest loss in value ($230 billion) by a US company in one day after the release of its last earnings report.