(CEP News) - A shortened trading week and little U.S. economic data is making some strategists question if the current rally in equity markets will last.
Markets will be closed on Friday in recognition of the Easter holiday.
With the first quarter earnings season just around the corner, markets will be sensitive to any surprises from the large corporations. Positive Q1 guidance reports released next week could lead to further gains in equities. Next week Alcoa and Chevron will be two major companies scheduled to announce first quarter earnings in the four days before Easter.
With little direction for markets next week, Colin Cieszynski, market analyst from CMC Markets Canada, said it is reasonable that markets could give back some of the gains they accrued in the previous three week. He added he is expecting markets to quietly trade sideways in the shortened week.
"I think we might see a pull-back, but I don't think it means we will be dropping back to the old lows," he said.
Looking at North American data, Conrad DeQuadros, from RDQ Economics, said Thursday's trade balance report could be interesting because it will help give some guidance to first Quarter GDP.
"Economists will be interested in the report, but I don't think it will have much impact on markets," he said. "Right now there is not a lot of focus on the fundamental data."
DeQuadros added weekly jobless claims will also be in the spotlight next week as it will provide more guidance for the economy and the jobs market.
Moving north of the border, Canadian employment, released on Thursday, will be the biggest report of the week in Canada, but its impact could be limited. George Davis, chief technical currency strategist from RBC Dominion Securities said the broader theme of risk aversion will remain the dominate theme for Canadian markets.
Looking at loonie's reaction to the employment data, he said it would take a major divergence from the consensus to cause a reaction in currency markets.
"There is a risk that any move would be short term and after a knee-jerk reaction the Canadian dollar would correct and following the general risk theme," he said.
Neil Mellor, currency strategist from the Bank of New York Mellon, said he is cautious about looking for further gains in equities next week. He said the recent rally in equities is built on "narrow foundations" and there is not a lot of data next week that will support the recent positive sentiment.
If equities are unable to hold their gains, Mellor added it will be positive for the U.S. dollar.
"I think a lot of negative data has been ignored as people rushed in to buy stocks," he said. "I think a reality check is looming out there. We still have a lot of negative data to go through.
All times in EDT.
Monday:
8:30 CA Building Permits (M/M) February Exp: -4.0% Prior:-4.6%
10:00 CA Ivey Purchasing Managers Index March Exp: 46.9 Prior: 45.2
13:00 US Fed Governor Warsh Speaks on Financial Markets in Washington
13:00 US Treasury to Sell $30B 3-Month Bills
13:00 US Treasury to Sell $28B 6-Month Bills
Tuesday:
10:00 US IBD/TIPP Economic Optimism April Prior: +45.3
11:30 US Treasury to Sell $25B 52-Week Bills
11:30 US Treasury to Sell 4-Week Bills
13:00 US Treasury to Sell 46B 10-Year TIPS Reopening
15:00 US Consumer Credit February Exp: -$3.0B Prior: +$1.8B
17:00 US ABC Consumer Confidence W/E April 5 Prior:-49
Wednesday:
7:00 US MBA Mortgage Applications W/E April 3 Prior: +3.0%
8:15 CA Housing Starts March Exp: +130.0K Prior: +134.6K Prior: +134.7K
10:00 US Wholesale Inventories February Exp: -0.5% Prior:-0.7% Prior:-0.9%
10:30 US DOE U.S. Crude Oil Inventories W/E April 3 Prior: +2844K
10:30 US DOE U.S. Gasoline Inventories W/E April 3 Prior: +2225K
10:30 US DOE U.S. Distillate Inventory W/E April 3 Prior: +221K
10:30 US DOE U.S. Heat Oil Inventories W/E April 3 Prior: +298K
10:30 US DOE U.S. Refinery Utilization W/E April 3 Prior:-0.28%
13:00 US Treasury to Sell 3-Year Notes
14:00 US Fed Releases Minutes from March 17-18 FOMC Meeting
Thursday:
7:00 CA Unemployment Rate March Exp: 8.0% Prior: 7.7%
7:00 CA Net Change in Employment March Exp: -57.0K Prior:-82.6K
8:30 CA New Housing Price Index (M/M) February Exp: -0.5% Prior:-0.6%
8:30 CA International Merchandise Trade February Exp: -1.2B Prior:-1.0B
8:30 US Trade Balance February Exp: -$36.0B Prior:-$36.0B
8:30 US Import Price Index (M/M) March Exp: +0.9% Prior:-0.2%
8:30 US Import Price Index (Y/Y) March Exp: -14.7% Prior:-12.8%
8:30 US Initial Jobless Claims W/E April 4 Exp: +660K Prior: +669K
8:30 US Continuing Claims W/E March 28 Exp: +5798K Prior: +5728K
10:30 US EIA Natural Gas Storage Change W/E April 3 Prior: +0
12:15 US Fed's Stern Speaks at an event in Sioux Falls, South Dakota
13:00 US Fed's Hoenig Speaks at an event in Tulsa, Oklahoma
13:00 US Treasury to Sell 10-Year Notes Reopening
April US ICSC Chain Store Sales (Y/Y) March Exp: 1.0% Prior:-0.1%
