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Markets head into a week of busy reports on the economy with the dollar continuing to struggle and investors pulling away again from the oil market, which saw a notable decline on Friday on worries about the lack of an agreement amongst big oil nations to restrict production. That could sour the tone on Wall Street, which used most of March regaining losses from the first five weeks of the year. Data on durable goods, service-sector sentiment and trade will help illuminate the economic picture as it currently stands.
Trade, manufacturing and services industries data will dominate in a quiet week. No surprises are expected in the trade report for February after advance figures showed a slight widening in the goods trade deficit. The U.S. Commerce Department is likely to report on Tuesday that the trade deficit widened to $46.2 billion from a deficit of $45.7 billion in January. Also on Tuesday, the Institute for Supply Management is expected to report that its non-manufacturing index edged up to 54.0 in March from a reading of 53.4 in February. Data from the Commerce Department on Friday is expected to show a 0.2 percent drop in wholesale inventories in February after a 0.2 percent gain in January.
Walgreens Boots Alliance Inc publishes second-quarter results on Tuesday. The drug store operator, which has offered to buy Rite Aid Corp, is likely to report sales below analysts’ average estimate, according to Thomson Reuters StarMine. The company has said that the process of gaining regulatory approval for the $9.4 billion deal, which would merge the No. 1 and No. 3 U.S. drugstore chains by store count, is proceeding as anticipated. Analysts have expressed skepticism about the deal receiving approval from antitrust regulators, saying the combined company would corner a big share of the market in several regions in the absence of independent pharmacies. Rite Aid reports fourth-quarter earnings on Thursday.
The Federal Open Market Committee releases minutes from its March meeting on Wednesday. Stock markets cheered Federal Reserve Chair Janet Yellen’s cautious tone last week that eased rate hike concerns. Investors will look for hints on how soon the Fed would raise interest rates again. A day later, Yellen participates in a conversation with current and former Federal Reserve chairmen before the Paul A. Volcker Distinguished Speaker Program in New York. Kansas City Fed President Esther George speaks on the U.S. economy on Thursday before an economic forum hosted by the Federal Reserve Bank of Kansas City’s Omaha Branch. Cleveland Fed President Loretta Mester speaks on the U.S. and regional economic outlook and monetary policy before a joint Cleveland Association for Business Economics, CFA Society Cleveland, and the Risk Management Association of Northern Ohio luncheon on Wednesday.
Monsanto Co will report second-quarter results on Wednesday after currency headwinds and aggressive seed-industry price cutting forced the seeds and agrochemicals company to slash 2016 earnings per share guidance last month in a rare, mid-quarter move. Monsanto’s shares are down about 25 percent from a year earlier amid a steep commodities price downturn and declining farm incomes that have blunted demand for crop inputs such as seeds, fertilizers and pesticides. But the company has a brighter long-term outlook with major product roll-outs in the United States, Brazil and Argentina that are expected to boost revenues.
Constellation Brands Inc reports fourth-quarter results on Wednesday. The Modelo and Corona beer maker raised its forecast for beer sales in January, boosted by strong demand for its Mexican beer brands. Strong sales growth of beer cans and the expanding distribution of craft beer by Ballast Point, which Constellation bought late last year, are expected to have helped in the quarter. Investors will look out for details on the recall of Corona Extra 12-packs and 18-packs of beer due to the presence of glass shards.
ConAgra Foods Inc reports third-quarter results on Thursday. The maker of Slim Jim beef jerky and Chef Boyardee pasta is likely to report quarterly sales slightly above analysts’ average estimate, according to StarMine. The company said in November it would sell its struggling private label foods business to TreeHouse Foods Inc for $2.7 billion and would spin off its Lamb Weston frozen potato products business. Investors will be looking for further cost-saving measures, as well as commentary on the health of its consumer foods business, where sales have been recovering for the past three quarters.
Canada’s biggest bank, Royal Bank of Canada, holds annual meeting in Montreal on Wednesday amid concerns over its exposure to the oil & gas sector and capital strength. RBC’s core tier 1 ratio, a measure of its financial strength, is the lowest of any major Canadian bank. The ratio has fallen below the 10 percent level, widely seen as the minimum requirement by global regulators, following RBC’s $5 billion purchase of City National Corp last year. The bank has the highest direct exposure to the energy sector among Canada’s largest banks and the biggest retail exposure to Alberta. Fears are growing that job losses in Alberta may lead to higher arrears and defaults on credit cards and mortgages.
The two big economic reports out of Canada next week will be the jobs and trade reports. Friday’s labor market report is expected to show the economy added 15,000 jobs in March, rebounding from the decline in the previous month but not enough to lower the unemployment rate from 7.3 percent. Investors will be watching to see if February’s steep loss in full-time jobs will be recovered as the report can be volatile month-to-month. Tuesday’s trade report is forecast to show Canada’s trade deficit widened slightly to C$0.75 billion in February. Economists will watch for further strength in the export sector, which is seen as being key to the economy regaining its momentum.
Bank of Canada Senior Deputy Governor Carolyn Wilkins is slated to deliver a speech in Vancouver on Tuesday.
Mexico’s gross fixed investment data for January will be published on Tuesday. On Thursday, inflation data for March will be published after the indicator cooled in the early part of the month on a drop in food costs. On Friday, consumer confidence data will be released for March after the indicator fell by the most in seven months in February.
ON MONDAY, APRIL 4 Boston Fed President Eric Rosengren speaks on “a view on cyber security and financial stability from the CEO” before the Federal Reserve Bank of Boston 2016 cyber security conference. (1015/1415) Later, Minneapolis Fed President Neel Kashkari participates in a town hall discussion on how to end the threat of too-big-to-fail banks. (1900/2300)
The U.S. Commerce Department is expected to report that factory orders fell 1.7 percent in February, reversing January's 1.6 percent increase. (1000/1400) Canadian department store operator Hudson's Bay Co reports fourth-quarter earnings. The owner of Saks and Saks Off 5th stores is expected to report a rise in quarterly profit, helped by continuing strength in its online sales. Investors will look for comments on the sales impact of the company's purchase of online luxury retailer Gilt in January. Bank of Canada Governor Stephen Poloz and Deputy Governor Carolyn Wilkins will speak to elementary students about the public consultations to choose a woman to appear on a bank note. (1000/1400) GMF: CURRENCY LIVECHAT with Eddie Tofpik Get the latest updates on the currency front with Eddie Tofpik, head of foreign exchange at ADM Investor Services International.(0500/0900) To join the Global Markets Forum, click here bit.ly/1kTxdKD (Compiled by Astha Rawat in Bengaluru; Editing by Maju Samuel)