Big bank earnings, IEA report, Tesla prices - what's moving markets

By Peter Nurse

Investing.com -- Investors will focus on the major U.S. banks at the beginning of the new quarterly earnings season, as well as the International Energy Agency's monthly report on the state of the oil market. Stocks are seen marginally lower, while Tesla has cut its prices in Germany.

1. Bank results start new earnings season

The new earnings season starts in earnest later Friday, with quarterly numbers from the banking giants Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and JPMorgan Chase (NYSE:JPM) leading the way.

The banking system has been under stress from rising interest rates, which have pinched the value of bond holdings. Rising rates have also quieted the deal markets and lessened demand for mortgages and other credit products.

Additionally, Fed policymakers cited concern about the health of the country’s banks while predicting a mild recession this year.

Thus, these big U.S. bank earnings reports will be studied even more carefully than before, with investors focusing on what the bankers say about the economic outlook, consumer credit quality, and business activity.

2. Turning Japanese

News this week of Warren Buffett’s increased interest in Japanese stocks has focused attention for Western investors on this long-abandoned region.

After a decade-long bull run through the 1980s, the Nikkei 225 index, Japan’s benchmark stock index, reached an all-time high of 38,915 on the last trading day of 1989. As the New Year arrived, the bubble burst, and the index has remained below that level for more than 30 years!

However, Japanese stocks have seen demand this year–with the Nikkei up over 9% year to date–as signs of easing inflation and a leadership change in the Bank of Japan saw markets bet that the central bank will maintain its ultra-easy monetary policy in the near term.

News that America’s most popular investor has increased his holdings in Japan’s five major trading houses as well as talk that he is considering more local investment is likely to lead to more widespread interest.

3. Futures just lower; Tesla cuts Model 3 price in Germany

U.S. futures traded marginally lower Friday, with investors consolidating after the previous session’s strong gains ahead of the start of the new earnings season.

At 04:30 ET (08:30 GMT), the Dow futures contract had dropped 95 points or 0.3%, S&P 500 futures inched 7 points or 0.2% lower, and Nasdaq 100 futures fell 27 points or 0.2%.

The main indices closed firmly higher Thursday, with investors cheered by the cooling of the March producer prices, suggesting a less hawkish Federal Reserve going ahead.

The earnings from a number of the nation’s biggest banks will be in focus Friday [see above].

Elsewhere, big insurer UnitedHealth (NYSE:UNH) is also expected to report earnings. Tesla (NASDAQ:TSLA) has lowered the price of its Model 3 in Germany by around 4.5%, according to data on its website, and Boeing (NYSE:BA) has halted deliveries of some 737 MAXs as it grapples with a new supplier quality problem.

4. U.S. economic data deluge

Fresh off the release of the lowest U.S. headline inflation rate in almost two years and minutes from the last Federal Reserve meeting talking about a “mild recession”, investors have a number of economic data releases to study later Friday.

Retail sales for March are expected at 08:30 ET (12:30 GMT), and are expected to show a year-over-year gain of 5.9% versus the 5.4% in the previous month, and a monthly contraction of 0.4%, same as before.

Industrial production, released 45 minutes later, is seen growing 0.2% on the month in March, an annual drop of 0.9%, while the preliminary reading of the consumer sentiment index from the University of Michigan is due at 10:00 ET.

5. Oil prices creep higher, heading for another positive week

Crude prices edged higher Friday, with the market heading for a fourth straight week of gains, supported by signs of a tightening global market.

By 04:30 ET, U.S. crude futures were 0.1% higher at $82.25 a barrel, while the Brent contract edged up to $86.10 per barrel.

The monthly report from the Organization of Petroleum Exporting Countries, released on Thursday, forecast that world markets would be under-supplied by about 2 million barrels a day in the fourth quarter as a result of the cartel’s recent cutbacks.

The International Energy Agency is set to release its monthly oil market report later in the session, and traders will be looking to see if the Paris-based organization downgrades its global demand outlook given the faltering macroeconomic growth.

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