Markets This Week – Fed Rate Decisions, Earnings, IPOs, and Political Deadlines

Spring will be upon us, and we are braced for an eventful week as multiple pivotal events loom on the horizon, each capable of shaping market dynamics and trends for the new season.

One that will appear near the top of all lists, is Federal Reserve Chair Jerome Powell's remarks following the central bank's interest rate decision.

Fed Reporting – March 20th

The Federal is widely expected to hold the fed funds interest rate steady at 5.25% to 5.5%, with an overwhelming probability in favour of no change, according to market projections. This steadiness suggests that the Fed believes the current policy is apt for controlling inflation despite the recent higher than expected print.

There is still an air of expectation that throughout 2024 there will be cuts between 0.75-1% from these levels, but that is not likely to begin until late in Q2 if analysts are to be relied upon.

IPOs

Spring brings new births, and the initial public offerings (IPOs) of Reddit (NYSE:RDDT) and Astera Labs (NASDAQ:ALAB) stand poised to energize the market, with Reddit targeting a $748 million raise on a $6.5billion valuation, and Astera Labs aiming for $534 million on a market cap of $4.5billion+.

Market reception to the bigger named IPOs this week could offer a temperature check on investor appetite for new equity amidst prevailing market conditions. Reddit is one that has been on the watchlist for a while, and indications are that the issue is already heavily oversubscribed.

Various other rumours abound on names wanting to list this year, but the number of those to actually do so in 2024 will likely depend in part on the results we see here.

Earnings Reports

Volatility is expected around earnings reports, and some significant industry players, including Micron Technology, a company that has really hit the headlines in recent weeks and sits 15% higher over the past month.

In US markets, Nike Inc, FedEx Corp, Xpeng, and Accenture are amongst other names reporting we will be keeping an eye on. From the UK, Prudential, Direct Line, TrustPilot, JD Wetherspoon & Next are those most likely to attract attention.

Nike's earnings report, particularly after the company's previous forecasts were cut due to weakening demand will be closely monitored for any signs of a turnaround or persisting challenges in the retail sector.

As the EV market struggles with sentiment for the first time in a while, Xpeng's quarterly results (Tues), will be scrutinized not just for the company's performance but also for indications of consumer behaviour and demand trends within the vital Chinese market. If there is something juicy in the report either way, we would expect those interested in Tesla et al to make some noise.

US Government Funding Bill Urgently Needed

On Capitol Hill, lawmakers face a pressing deadline, with Congress required to pass government funding bills (yes, again) by Friday to avert a shutdown that would affect various agencies.

Although seemingly unlikely, if there were to be a shutdown, the impact would stretch to millions of federal workers and military personnel, including about 60% of civilian federal employees. The outcome could undoubtedly sway market sentiment, as political stability and seamless governmental operations remain key to economic confidence.

There is a lot to watch this week, and we will cover it all. The confluence of a Fed rate decision, corporate earnings, government fiscal deadlines, and new market entrants via IPOs presents a complex tapestry to navigate. It will be anything but boring.