Key events to watch in the week ahead: 20 – 26 May 2024

This week’s overview

Wall Street managed to find comfort in the US consumer price index (CPI) this week, which offered some reassurances that US inflation is still on a broader downward trend. Market expectations were better anchored for rate easing to kickstart in September this year, which took major US indices to touch fresh record highs.

Into the new week, here are five things on the radar.

US earnings season: Zoom Video, Target, NVIDIA

As the US earnings season continue to wind down, focus will be on NVIDIA’s earnings next week, which will be a key determinant of whether the risk rally in Wall Street can continue.

Current expectations are for NVIDIA’s 1Q 2024 revenue to increase more than three-fold to US$24.6 billion, up from the US$7.2 billion in 1Q 2023. Earnings per share (EPS) is expected to come in at US$5.57, up more than five-fold from the US$1.09 from a year ago.

21 May 2024 (Tuesday, 9.30am SGT): Reserve Bank of Australia (RBA) meeting minutes

At its Board Meeting in May, the RBA kept its official cash rate on hold at 4.35%, as widely expected. Despite a higher-than-expected Q1 inflation read, the RBA was less hawkish than feared as it retained a balanced bias, noting that it is not "ruling anything in or out".

The RBA revised its inflation forecasts for this year higher, leaving its inflation forecasts unchanged for the end of 2025 and the end of 2026. At the same time, the RBA revised its growth and unemployment forecasts slightly lower.

The minutes will be closely scrutinised to determine what options the RBA Board considered at its Board meeting in May and any clues behind the RBA's less hawkish-than-expected tone.

22 May 2024 (Wednesday, 2pm SGT): UK inflation rate

In the previous read, the headline annual inflation rate in the UK fell to 3.2% year-on-year from 3.4% prior, its lowest rate since September 2021. The annual core inflation rate, which excludes volatile items such as energy and food, dropped to 4.2%, the lowest since December 2021.

Inflation's steady progress back towards the Bank of England (BoE)'s target has played a significant role in the BoE's dovish tilt, which sees the rates market 50% priced for a 25 basis point (bp) BoE rate cut in June with a full 25 bp rate cut priced by August.

The market's preliminary expectation for April is for headline inflation to ease to 2.7% YoY and for core inflation to fall to 3.6%. If validated, this should increase the chances of a rate cut in June.

23 May 2024 (Thursday, 2am SGT): Federal Open Market Committee (FOMC) minutes

At the latest Federal Reserve (Fed) meeting, US policymakers kept interest rate unchanged at 5.25%-5.50% in a widely expected move.

Fed Chair Jerome Powell indicated a high threshold for additional rate hikes, but he also highlighted a “lack of further progress” towards its inflation objective and wants to seek for greater confidence before considering rate cuts. This has been echoed by a slew of Fed officials’ comments lately, with the high-for-longer rate outlook likely to be reiterated in the upcoming minutes.

That said, the minutes may be slightly backward-looking, given that it will not factor in the weaker run in economic data following the meeting. Weaker-than-expected US job gains for April and further easing in consumer inflation this week may be perceived to offer some leeway for the Fed to consider earlier rate cuts.

Nevertheless, clues will be sought from the minutes on the timeline for Fed’s cuts and policymakers’ views around the inflation and growth outlook.

24 May 2024 (Friday, 7.30am SGT): Japan’s inflation rate

While Japan’s March inflation data has shown some signs of cooling, pricing pressures have been staying above the Bank of Japan (BoJ)’s 2% target for the past two years. Headline inflation read for March stood at 2.7% year-on-year, while core inflation stood at 2.6%.

Slow inflation progress towards target may explain the BoJ’s decision to revise up their inflation outlook at the April policy meeting. For its economic forecasts, the central bank revised its FY2024 core inflation to 2.8% from previous 2.4%, while FY2025 projection was revised to 1.9% from previous 1.8%.

BoJ Governor Kazuo Ueda earlier said that the central bank would raise interest rates if fresh data back up its latest price forecasts or if inflation overshoots the projections. For now, expectations are for Japan’s April headline inflation to show further easing to 2.5% from previous 2.7%, which may support more patience for the BoJ in their policy normalisation process.