The Week Ahead: UK inflation, US retail sales, Netflix results

With the initial market reaction to Trump’s tariff tantrum behind us, we can now turn our attention to the real economic impact. US retail sales data for March, out on Wednesday, will give markets a sense of the extent to which consumers pulled back or stocked up as pre-‘Liberation Day’ anxiety began to set in. Higher import costs could also weigh on US company earnings and guidance, which will come into focus in the week ahead as earnings season gathers pace. 

UK March CPI

Wednesday 16 April 
Economists estimate that the UK consumer price index increased 3.2% in the year to March, up from 2.8% in February. If the forecasts are correct, inflation rose to its highest rate since March 2024. Meanwhile, core CPI – which excludes volatile food and energy prices – is expected to have eased to 3.3% in March, down from 3.5% in February. On a monthly basis, core CPI is thought to have remained steady at 0.4%. 

The data could influence where the pound goes next, especially as the dollar weakens amid an apparent capital flight from the US. Against this background, lower-than-expected UK inflation figures are unlikely to hurt the pound, while higher-than-expected readings could support it.

The pound has been consolidating around $1.28, which also aligns with the 200-day moving average. The pound now appears to be in a well-formed uptrend against the dollar, suggesting that GBP/USD may continue to rise, potentially to retest the highs around $1.31 in the near term.

GBP/USD, May 2024 - present

US March retail sales

Wednesday 16 April 
US retail sales are expected to have risen 1.3% month-on-month in March, based on analyst estimates, up from 0.2% in February. Excluding autos, retail sales are thought to have increased 0.2% month-on-month, down from 0.3% a month earlier. 

The estimate for the headline figure points to a significant jump, suggesting that consumers may have stocked up on goods ahead of the tariff announcement in anticipation of rising prices. However, if consumers started to rein in their spending ahead of so-called Liberation Day, retail sales growth in March could come in weaker than expected.

The data may not even matter, as the market is moving from minute to minute, headline to headline. One thing seems clear, however: the dollar is weakening rapidly against multiple currencies, and USD/JPY remains one of the beneficiaries. After consolidating around ¥146.40 in recent days, the Japanese yen on Friday strengthened past ¥142.50 per dollar and now appears to be moving towards the 2024 low near ¥140.50. 

USD/JPY, February 2024 - present

Netflix Q1 results

Thursday 17 April
Netflix is set to report that its first-quarter earnings grew 7.9% year-on-year to $5.70 a share, as revenue expanded 12.1% to $10.5bn, according to analyst estimates. Since the streaming service provider stopped providing forward guidance on net subscriber additions, this data point has become harder to predict, but analysts currently expect 5.1 million additions in Q1.
Looking ahead to the second quarter, analysts expect revenue to grow 14.1% to $10.9bn, with earnings at $6.29 a share. 

The options market is pricing in a post-Q1 earnings move higher or lower of nearly 10% for Netflix shares, which fell 2.6% on Thursday to $921. In the options market Netflix’s implied volatility levels could be very high by the time it reports Q1 results, probably well above the 100% level, and the stock currently has many bullish call positions open. This suggests that a sharp implied volatility reset following the results could trigger market-maker hedging flows that pressure the stock lower.

From a technical analysis perspective, the Netflix share price has been trending lower since March, as the below chart shows. Furthermore, the relative strength index has fallen from a reading of more than 80 in November to current levels of about 48, indicating a drop in momentum. If the Nasdaq-listed stock drops below a key level of support around $820, it could sink even lower, potentially filling a gap around $688.

Upside potential appears limited unless the company comfortably beats estimates and raises guidance above current expectations. If the stock breaks out of the current downtrend, the first level of resistance could be $995, followed by the year-to-date high around $1,065.

Netflix share price, March 2024 - present

Key economic and company events

The coming week’s major economic announcements and scheduled US and UK company reports include:

Monday 14 April

• China: March imports, exports and trade balance
• Results: Goldman Sachs (Q1)

Tuesday 15 April

• Australia: Reserve Bank of Australia rate-setting meeting minutes
• Canada: March consumer price index (CPI)
• Eurozone: European Central Bank lending survey
• France: March CPI
• UK: February unemployment rate, March claimant count change
• Results: Bank of America (Q1), Citigroup (Q1), Interactive Brokers (Q1), Johnson & Johnson (Q1), PNC Financial Services (Q1)

Wednesday 16 April

• China: Q1 gross domestic product (GDP), March retail sales, March industrial production
• Canada: Bank of Canada interest rate decision
• Eurozone: March harmonised CPI
• Japan: March imports and exports
• New Zealand: Q1 CPI
• UK: March CPI and producer price index (PPI)
• US: March retail sales
• Results: Abbott Laboratories (Q1), Prologis (Q1), United Airlines (Q1), US Bancorp (Q1), WH Smith (HY)

Thursday 17 April

• Australia: March unemployment rate and employment change
• Eurozone: ECB interest rate decision
• Japan: March CPI 
• US: Weekly initial jobless claims to 11 April
• Results: American Express (Q1), Blackstone (Q1), J Sainsbury (FY), Marsh McLennan (Q1), Netflix (Q1), UnitedHealth (Q1)

Friday 18 April

• UK, US and various countries: Markets closed for Good Friday
• Results: No major scheduled earnings announcements

Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.