Last week the S&P 500 and Nasdaq moved lower for the week and investors remained cautious following the rise of geopolitical tension in Syria, the release of the minutes from the Fed’s March meeting that shows Fed members have uncertainty about potential changes to U.S. fiscal policy in 2017, and a March jobs report on Friday revealing the U.S. economy added just 98,000 non-farm payroll jobs.
Investors were also awaiting to discover how a bilateral meeting last Thursday and Friday between Chinese President Xi Jinping and U.S. President Donald Trump would unfold and how the thorny topic of North Korea would be addressed.
During a Friday White House press briefing held in Florida, the topic of North Korea’s nuclear program surfaced and U.S. Secretary of State Rex Tillerson admitted that Chinese President Xi Jinping shared the view that it has reached a very serious stage in terms of the advancement of North Korea’s nuclear capabilities.
Secretary Tillerson said that after discussing the challenges, there’s a real commitment to work together to see if it could be resolved in a peaceful way.
However, it was noted that in order for that to happen, “North Korea’s posture has to change before there’s any basis for dialogue or discussions.”
The Financial Times reported on Sunday that China has agreed to offer a concession to the U.S. to avert a trade war that includes offering the Trump administration better market access for financial sector investments and end a ban on American beef exports that has been in place since 2003 in addition to buying more American agricultural products.
The Financial Times story indicates that U.S. officials are “pressing their Chinese counterparts to lower their 25 percent tariff on automotive imports” in return for greater protection of Chinese investments in the U.S. and to relax restrictions on the sale of certain high tech products to China.
The Week Ahead
This week investors will be digesting a wave of corporate earnings that includes several banks on Thursday such as Citigroup Inc. and JP Morgan Chase and a March retail sales report due on Friday.
On Thursday Michigan Sentiment for April is reported along with an inflation report (PPI) for March.
On Friday, the market closes early (1:00 p.m. EST) in observance of Good Friday and the economic data due for the day is expected to center around the March retail sales report.
Economists from briefing.com have a consensus estimate that retail sales declined -0.1 percent in March after increasing 0.1 percent in February.
Another March inflation report (CPI) is due on Friday along with business inventories for February.
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