Earnings season: Tech giants report, Powell's final dance, Fed rate decision, Xizhi Tech IPO.

Powell's "Last Dance"?

The market widely anticipates that the Federal Reserve will maintain interest rates at its upcoming meeting next week (2 AM Beijing time on Thursday). With no new economic forecasts or dot plots being released, investors will focus on policymakers' views regarding the economic impact of the Middle East conflict and the future path of interest rates. Concerns over rising energy prices due to the war have led to a reduction in expectations for rate cuts this year. According to LSEG data, the market now expects a cut of less than 25 basis points by December, down from earlier expectations of at least two cuts before the conflict began in February.

Fed's Stance and Leadership Transition

Marvin Loh, a senior global macro strategist at State Street Bank, noted that the Fed's wait-and-see approach provides some support for U.S. assets compared to other central banks that may continue to raise rates. This meeting could also mark Powell's last as Fed Chair, with his term ending on May 15. Kevin Warsh, nominated by Trump as the next Fed Chair, attended a confirmation hearing this week. The U.S. Department of Justice has concluded its investigation into Powell regarding the Fed's headquarters renovation costs, clearing a key obstacle for Warsh's succession.

Mohit Kumar, a global economist at Jefferies, stated that a Fed led by Warsh would likely adopt a more dovish stance on interest rates, with Jefferies still expecting two rate cuts this year.

Upcoming Economic Data and Global Central Bank Meetings

On Thursday at 2:00 AM, the Fed's FOMC will announce its interest rate decision, followed by a press conference with Powell at 2:30 AM. Next week will also see the release of Q1 U.S. economic growth data and the March Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation measure. Both reports may reveal the economic impact of the ongoing Middle East conflict.

In addition to the Fed, the European Central Bank (ECB), Bank of Japan (BOJ), and Bank of England (BOE) will also announce their latest interest rate decisions next week. Investors will be keen to hear how central bank leaders view the impact of soaring energy prices due to the conflict and the potential for rate adjustments in the coming months.

Market Reactions and Earnings Reports

The strong upward momentum in the U.S. stock market will face a significant test next week with numerous earnings reports, particularly from major tech companies. The S&P 500 index has surged approximately 13% since March 30, while the Nasdaq Composite has risen over 19%. Ameriprise's chief market strategist, Anthony Saglimbene, emphasized that next week will be crucial for confirming this rally, as tech giants need to deliver surprising earnings to sustain stock price increases.

Investors are also looking forward to earnings from companies like WuXi AppTec, Domino's Pizza, and others, as well as new listings from companies like Xizhi Technology and Maiwei Biotechnology.

Key Financial Events Next Week

• Tuesday: BOJ interest rate decision and economic outlook report; press conference by BOJ Governor Kazuo Ueda.
• Wednesday: Bank of Canada interest rate decision and monetary policy report; press conference by BOC Governor Tiff Macklem.
• Thursday: BOE interest rate decision and monetary policy report; ECB interest rate decision and press conference by ECB President Christine Lagarde.

The upcoming week is packed with significant financial events and earnings reports that could shape market sentiment and investor strategies.