Consumer prices in China increased at a higher than expected rate, the rate of increase was lower than the preceding month. China’s April CPI was up 5.3%, above the 5.2% expectation and the 5.4% increase in the March reading. The monetary authorities have been employing a combination of increased reserve requirements for banks and interest rate hikes to combat the pricing pressures. The benchmark one-year interest rate has gone up four times in the last seven months and the expectations are for one or two more rate increases this year.
The earnings season is winding down, but we still have a few major ones trickling in. We had a soft report from Disney (DIS) after the close on Tuesday, with strength on the advertizing and parks end offset by weakness in the studio business. Macy’s (M) came out with an impressive earnings report this morning. The department store giant came ahead of top- and bottom-line expectations and raised guidance and dividend.
We have Cisco (CSCO) reporting after the close today. The beleaguered network giant has been unable thus far to respond to secular shifts in its core products and end markets, raising doubts about its business model.
Given the lack of any major catalysts, I am looking for a quiet trading session today, though the overall tone will likely remain positive. We have a lot on the economic docket tomorrow, with Jobless Claims as the key report.
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