US economy figures will dominate investors' week ahead

Figures indicating the strength of the US economy will attract the most attention from investors this week.

Data on personal income and spending will be out on Monday (US time) while the April jobs report is due on Friday.

Chinese factory activity (Monday) and inflation figures from the eurozone (Thursday) are also due.

Stocks on Wall Street ended last week in the red after one of the busiest periods of the first-quarter corporate earnings season.

Strong results from a number of technology giants helped the Nasdaq end a five-session losing streak.

Facebook shares edged down 0.3% on Friday but rose 4.4% for the week after the company’s results showed revenue surging even after it weathered crises related to its handling of users’ data.

Amazon.com jumped 3.6% after posting its best revenue growth in more than six years. For the week, the stock added 3%.

“We’ve seen Facebook and Amazon really deliver on the earnings side, and that’s been a counterbalancing force there after the fear of regulation weighed that sector down,” says Mark Heppenstall, chief investment officer at Penn Mutual Asset Management.

The Dow Jones Industrial Average eased less than 0.1% to 24,311.19, the S&P 500 edged up 0.1%, to 2669.91 and the Nasdaq Composite added less than 0.1%, to 7119.80.

All three indexes posted weekly losses, with the Dow industrials losing 0.6%, the S&P 500 shaving off less than 0.1% and the Nasdaq falling 0.4%.

The Stoxx Europe 600 rose 0.2%. France’s CAC 40 was up 0.5%, Germany’s DAX rose 0.6% and the UK’s FTSE 100 was up 1.1%.

Rising bond yields
Many analysts have attributed the return of volatility in the stock market to the rise in bond yields.

“Equity markets have been very highly priced, and everything really for the past few years has been predicated on very low bond yields and liquidity injections from central banks,” says Jon Day, fixed-income portfolio manager at Newton Investment Management.

“That’s being pulled away, so you’re likely to see things being repriced.”

US Treasury prices fell for a fourth consecutive week, with the yield on the benchmark 10-year Treasury note settling at 2.959%, compared with 2.949% the previous Friday. 

Oil prices edged lower but continued to be largely supported by uncertainty over the fate of the Iran nuclear deal.

Brent, the global benchmark, ended the week up 58USc at $US74.64.while US crude lost 30USc, snapping a two-week streak of gains.

Economy week ahead
China’s official manufacturing purchasing managers index is expected to have eased to 51.3 in April from March’s 51.5. That would add to recent signs of slowing economic growth momentum.

Trade tensions with the US may have caused some firms to pull back on orders, although global demand is still holding up.

The personal income and expenditure figures from the US Commerce Department for March will indicate whether they have picked up from the slower pace in February. Economists surveyed by the Wall Street Journal expect spending rose 0.4% in March compared with 0.2% in February.

Eurozone inflation has been weaker than the European Central Bank hoped for in the early months of the year. But figures to be released on Thursday are expected to show a second straight month of increases in the headline rate, to 1.4% in April from 1.3% in March.

However, economists also expect to see a weakening of the core inflation rate, which would reinforce policymakers’ caution as they decide when and how to end a bond-buying stimulus programme.

The April jobs report from the US Labor Department will indicate whether the unemployment rate continues its six-month streak at 4.1%.

Economists surveyed by the Wall Street Journal forecast the unemployment rate will show a drop to 4% as the economy added 197,000 jobs in April. This compares with a seasonally adjusted 103,000 in March after February’s outsize increase of 326,000.