Investing.com - Geopolitics and trade talk will likely keep investors on their toes this week as they watch further developments in Syria and evaluate the potential impact of the simmering trade spat between the United States and China.
News out of Washington D.C. could also be a key driver of sentiment this week amid reports that President Donald Trump will fire Deputy Attorney General Rod Rosenstein. Analysts have said Trump could seek to replace Rosenstein with someone who would limit the scope of special counsel Robert Mueller's investigation to focus on just collusion with Russia.
The coming week also marks the first big week of the first-quarter earnings season on Wall Street, with names like Goldman Sachs, IBM and Johnson and Johnson set to report.
There is also some data stateside in the week ahead, with retail sales topping the list of economic reports.
Elsewhere, in Asia, China is slated to release what will be closely watched first-quarter growth data.
Over in Europe, traders will focus on British inflation data for further hints on the likelihood of the Bank of England raising interest rates this year.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. Fallout From Syria?
The United States, Britain, and France pounded Syria in a coordinated air strike on Friday night, in what was called the biggest intervention in Syria's civil war by Western powers since the conflict began in 2011.
The airstrikes came in response to an alleged chemical weapons attack believed to be carried out by forces aligned with the government of Syrian President Bashar Assad in Douma, a town that was held by Syrian rebels.
President Donald Trump hailed the U.S.-led intervention in Syria as "perfectly executed" in a tweet on Saturday, adding that the military campaign to degrade the Assad regime's chemical weapons capability had accomplished its goals.
Trump's declaration came as Russia, which is backing Assad's government in the conflict, denounced the bombing campaign with undisguised contempt. Russian President Vladimir Putin called the intervention an "act of aggression," while Russia's ambassador to the U.S. warned of "consequences."
The dispute over Syria was the latest wedge between the West and Russia, which has been embroiled in multiple controversies with western governments.
Market sentiment could take a hit this week if the war of words between Washington and Moscow escalates.
2. U.S. Q1 Earnings Season Kicks Into High Gear
A handful of Dow components report in the week ahead, along with dozens of S&P 500 companies, in what will be the first big week of the first-quarter earnings season.
Earnings growth is expected to be up about 18.5%, according to Thomson Reuters data, the highest in seven years, as results are likely to have been boosted by President Donald Trump's tax cuts.
Bank of America (NYSE:BAC) reports Monday, along with tech darling Netflix (NASDAQ:NFLX).
Tuesday sees Goldman Sachs (NYSE:GS), IBM (NYSE:IBM), Johnson & Johnson (NYSE:JNJ) and UnitedHealth (NYSE:UNH) post results.
On Wednesday, Morgan Stanley (NYSE:MS) and American Express (NYSE:AXP) report earnings.
Philip Morris (NYSE:PM) and Blackstone (NYSE:BX) are on the docket Thursday.
Finally, corporate results from Procter & Gamble (NYSE:PG), General Electric (NYSE:GE) and Honeywell (NYSE:HON) round up the week on Friday.
The first three major banks, JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC), to report earnings Friday all beat expectations. But their stocks traded lower, as the strong results were already priced in.
Besides earnings, financial stocks could be sensitive to headlines this week as Fed Governor Randal Quarles testifies before both House and Senate committees Tuesday and Thursday on banking regulation. In the past week, the Fed said banks should be allowed to take on more leverage.
U.S. stocks fell on Friday, as results from big banks failed to provide enthusiasm and fear of broader conflict in Syria further unnerved investors.
Despite Friday's decline, the major averages still posted strong gains for the week. The Dow and S&P 500 rose 1.8% and 2% respectively, while the Nasdaq advanced 2.8%.
3. U.S. Retail Sales
The Commerce Department will publish data on retail sales for March at 8:30AM ET (12:30GMT) Monday.
The consensus forecast is that the report will show retail sales rose 0.4% last month, snapping back after a decline of 0.1% in February.
Core sales are forecast to inch up 0.2%, the same as its rise a month earlier.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.
Besides the retail sales report, this week's calendar also features U.S. data on building permits, housing starts, industrial production, as well as surveys on manufacturing conditions in the Philadelphia and New York regions.
On the central bank front, the Federal Reserve's Beige Book will be in focus.
In addition, market players will also pay close attention to comments from a number of Fed speakers this week for insights into the outlook for monetary policy.
Topping the agenda will be remarks from Federal Reserve Bank of San Francisco President John Williams, who in June will take on the pivotal New York Federal Reserve president's position.
The new appointee takes over for William Dudley, who late last year announced he would be leaving by mid-2018 and whose last day will be June 17.
Speeches from Atlanta Fed boss Raphael Bostic, Philadelphia Fed President Patrick Harker, Chicago Fed President Charles Evans, New York Fed's Dudley and Fed Governor Lael Brainard will also be in focus.
The Fed hiked rates last month and stuck to its projection for two more rate hikes this year.
Traders are currently pricing in around a 95% chance of a rate hike in June, according to Investing.com’s Fed Rate Monitor Tool. Odds of a third rate hike by December was seen at about 85%.
4. China Q1 GDP
China will be the first major economy to report first-quarter growth data when it publishes its GDP numbers at around 0200GMT on Tuesday (10:00PM ET Monday).
The report is expected to show the world's second-largest economy grew 6.8% in the January-March period for the third straight quarter, carrying on the momentum from 2017.
The Asian nation will also publish data on March industrial production, fixed asset investment and retail sales along with the GDP report.
Trade figures released last week showed that China's exports unexpectedly fell in March, resulting in a rare trade deficit. However, most analysts chalked it up to seasonal factors and said it was too early to call a trend.
Meanwhile, investors will continue to assess whether a series of tit-for-tat responses between the U.S. and China will end in negotiations or an all-out trade war between the world’s two largest economies.
5. UK CPI Figures
The UK Office for National Statistics will release data on consumer price inflation for March at 0830GMT (4:30AM ET) on Wednesday.
Analysts expect annual CPI to hold steady at 2.7%, while core inflation is forecast to rise slightly, from 2.4% to 2.5%.
In addition to the inflation report, traders will focus on monthly employment and retail sales data, due on Tuesday and Thursday, respectively for further indications on the continued effect that the Brexit decision is having on the economy.
The BoE kept interest rates steady last month, but two policymakers unexpectedly voted for a hike, reinforcing the view that borrowing costs will rise in May for only the second time since the 2008 financial crisis.
Politics is also likely to be in focus, especially as the Brexit negotiations enter a key phase with just around a year to go until the deadline to agree to an official deal is reached.
While Britain's economy is lagging behind the global recovery, it has held up better than the gloomy forecasts made at the time of the 2016 vote to leave the European Union.
Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/