Investing.com - Here are the top five things you need to know in financial markets on Friday, July 14:
1. Bank earnings in spotlight as Q2 earnings season kicks off
The “unofficial” start of the second quarter (Q2) earnings season will begin on Friday with JP Morgan’s (NYSE:JPM) report scheduled for approximately 7:00AM ET (11:00GMT).
With only 26 of the S&P 500 firms having reported so far, the JP Morgan will be the first Dow component to release earnings on Friday in what will be a big day for bank shares.
Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) will also step up to the plate ahead of the open with their own earnings releases at approximately 8:00AM ET (12:00GMT).
2. Inflation data not expected to remove Fed’s cautious stance
Remarks from Federal Reserve (Fed) chair Janet Yellen in her testimony to Congress this week suggested that the central bank still planned on tightening monetary policy only gradually over concerns about readings of subdued inflation.
June inflation figures will be released at 8:30AM ET (12:30GMT) Friday. Market analysts expect consumer prices to ease up 0.1%, while core inflation is forecast to increase 0.2%.
On a yearly base, core CPI is projected to climb 1.7%. Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
Rising inflation would be a catalyst to push the Fed toward raising interest rates.
Markets remain skeptical that the central bank will undertake a further hike this year, putting the odds at only around 41%, according to Investing.com’s Fed Rate Monitor Tool.
3. Consumer data in focus
Market participants will also keep a close eye on consumer data on Friday as spending represents roughly 70% of the U.S. economy.
The Commerce Department will publish data on June retail sales alongside the inflation figures at 8:30AM ET (12:30GMT). The consensus forecast is that the report will show retail sales rose 0.1% last month. Core sales are forecast to inch up 0.2%.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy
Then at 10:00AM ET (14:00GMT), the University of Michigan will release its preliminary reading of consumer sentiment for July.
4. Global stocks tread water near record highs
Global stocks treaded water on Friday, holding near record highs and capping their best week in over two months with bets on a gradual Fed rate hike path and hopes for a strong earnings season boosting risk appetite.
U.S. stock futures pointed to a slightly lower open on Wall Street as market players were cautious ahead of bank earnings and a slew of data. At 5:50AM ET (9:50GMT), the blue-chip Dow futures slipped 0.05%, S&P 500 futures lost 0.10% while the Nasdaq 100 futures dropped 0.06%.
European shares were poised for their best week since late April, though investors showed caution ahead of key references. At 5:52AM ET (9:52GMT), the European benchmark Euro Stoxx 50 inched up 0.04% while Germany’s DAX slipped 0.09%. London's FTSE 100 led decliners among major stock market indices, falling around 0.3% as a stronger pound put pressure on exporters and investors opted to take profit at the end of a positive week.
Earlier, Asian stocks also showed muted trade with Japan’s Nikkei ending up just 0.09% and China’s Shanghai Composite closing 0.13% higher.
5. Oil on track for weekly gains of 5%
Oil continued its rally for a fifth straight day on Friday, heading for weekly gains of nearly 5%.
Supporting bullish sentiment in crude this week, U.S. crude inventories registered a larger-than-expected draw and investors cheered data pointing to an increase in demand for oil from China as imports increased 13.8% to 8.55m bpd during the first six months of the year, compared to the same period a year ago.
That outweighed the bearish news that OPEC compliance on the agreement to extend production cuts with non-OPEC members led by Russia by 1.8 million barrels per day through March 2018 hit 78%, its lowest level in six months.
U.S. crude oil futures gained 0.56% to $46.34 at 5:54AM ET (9:54GMT), while Brent oil traded up 0.58% to $48.70.
Market participants will keep an eye on increasing U.S. shale production when Baker Hughes releases its most recent weekly rig count data later on Friday.
The energy services company said last week that U.S. drillers had added seven oil rigs, marking a 24th week of increases out of the last 25.