Market awaits next catalyst

The week has kicked off in a rather quiet fashion. The lack of volatility in the Asian spilled across into Europe and Wall Street has opened in a similar way.

The week has kicked off in a rather quiet fashion. The lack of volatility in the Asian spilled across into Europe and Wall Street has opened in a similar way. 

The Dow edged lower following disappointing results from Goldman Sachs. The bank missed on estimates for sales and trading performance. There were no fireworks for Citigroup either, which matched expectations. These so-so results come following a solid performance from JP Morgan, which reported record breaking profits on Friday.

Fears of slowing global growth have lingered, particularly since the dovish turn from the Fed at the start of the year. More recent data, particularly from China and the Eurozone has shown signs of stabilisation and investors are now looking to US earning season for indications as to how well corporate American is holding up. However, whilst banks are expected to report reasonably solid results, earnings outside of this sector could struggle to impress. China’s GDP release on Wednesday could hit risk appetite hard.

Brexit on pause, UK data back in focus

The pound started the week in a lacklustre manner, with investors pausing for breath after the whirlwind of recent Brexit developments. With Parliament on Easter break, pound traders will switch attention back towards data. Tomorrow sees the release of UK wage growth data which is expected to tick higher to 3.5%, up from 3.4%. Wednesday March’s inflation figure is expected to show prices increasing back to 2% year on year.

With Brexit having been kicked 6 months down the road, the BoE could feel more comfortable about hiking rates. Any signs of inflationary pressures increasing owing to stronger wage growth or higher inflation could tempt more BoE policymakers to adopt a hawkish stance. Therefore, solid readings on Tuesday and Wednesday could lift the pound back towards $1.32

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