Interest rates in Poland, the UK and Australia have remained unchanged at high levels despite the lowest inflation readings for many months, which are within the central banks' inflation targets. The key question is which central bank will be the first to decide to break this precedent and cut interest rates? The coming week will focus on the topic of inflation, as we will learn inflation data from Germany, the US and the Eurozone. Look out for possible increased volatility in the currency market, particularly in the pairs with the dollar and the euro.
Table of contents:
- German consumer price index (CPI) annualised (April)
- US consumer price index (CPI) annualised (April)
- Eurozone consumer price index (CPI) annualised (April)
- Stocks to watch
Tuesday, 14.05, 8:00 CET, German consumer price index (CPI) annualised (April)
According to preliminary estimates, German consumer inflation stood at 2.2% in April 2024, remaining at its lowest level since May 2021. The slowdown in services inflation was offset by a rebound in food prices and a smaller decline in energy costs relative to the last reading due to the end of the temporary gas tax cut this month.
Analysts' current forecast is for CPI inflation to remain at 2.2%.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bullish impact on the EUR, while a lower-than-expected reading could be bearish for the EUR.
Impact: EUR/USD, DE40
Wednesday, 15.05, 14:30 CET, US consumer price index (CPI) annualised (April)
The US annual inflation rate accelerated in March 2024 for the second consecutive month to 3.5%, the highest level since September. Energy costs rose due to increases in oil prices. Inflation stabilised for food, but rose sharply for transport and clothing. On the other hand, prices of new and used cars and trucks fell. Increases in domestic and petrol costs contributed to more than half of the monthly increase.
Analysts' forecast is for current CPI inflation to remain at 3.5%, still above the Fed's inflation target of 2%.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bullish impact on the USD, while a lower-than-expected reading could be bearish for the USD.
Impact: EUR/USD
Friday, 17.05, 11:00 CET, Eurozone consumer price index (CPI) annualised (April)
According to preliminary estimates, the annual inflation rate in the euro area remained at 2.4% in April 2024. Inflation slowed down for non-energy industrial goods and services. On the other hand, food, alcohol and tobacco prices rose faster, while energy prices fell more slowly than before.
The current analyst forecast is for CPI inflation to remain at 2.4%.
Source: Tradingeconomics.com
A higher-than-expected reading could have a bullish impact on the EUR, while a lower-than-expected reading could be bearish for the EUR.
Impact: EUR/USD
Stocks to watch
- Cisco (CSCO)
Cisco Systems, a technology corporation specialising in the design, manufacture and sale of networking equipment, will release its third financial quarter results on Wednesday. Adjusted profit is expected to fall. The company has been investing in artificial intelligence and quality improvements, but its financial performance has been under pressure due to customers' cautious approach to spending.
Cisco shares are at their lowest level in a year, losing around 11% over the past six months. The decline is the result of lowered annual revenue forecasts and a 5% reduction in global headcount. The average price forecast by analysts is $53.3, 11.5% above current levels.
- Walmart (WMT)
Walmart shares have gained 16% since the start of the year, beating the main S&P 500 index, and could reach new highs if first-quarter results and forecasts are positive on Wall Street on 16 May. Walmart remains a leader in the retail sector, competing with Amazon and Target with its broad delivery and pickup offerings and subscription services that keep customers loyal. The company is also launching a new premium food brand, Bettergoods, to attract more affluent customers and compete with Target and Trader Joe's brands.
Over the past five years, Walmart's shares have risen by around 80%, matching the S&P 500 and almost doubling the retail sector average score. The average price forecast by analysts is US$65.4, 8% above current levels.
- Take-Two (TTWO)
Take-Two Interactive, developer and publisher of games such as Grand Theft Auto and Red Dead Redemption, will release its quarterly results on Thursday 16 May. Many are awaiting news of a new instalment in the GTA series. Take-Two Interactive has been named one of the top 50 mobile game developers of 2023.
Despite rising expectations, Take-Two's shares are still 33% below their historic highs in early 2021. The average analyst forecast price is US$178, 22% above current levels.
Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
The above trade publication does not constitute an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No. 596/2014 of April 16, 2014. It has been prepared for informational purposes and should not form the basis for investment decisions. Neither the author of the publication nor Conotoxia Ltd. shall be liable for investment decisions made on the basis of the information contained herein. Copying or reproducing this publication without written permission from Conotoxia Ltd. is prohibited. Past performance is not a reliable indicator of future results.
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