Australian CPI And Tesla Earnings Reports In Focus

In a week relatively light on financial data reports, the Australian CPI inflation data due on Wednesday takes center stage. Early on Tuesday morning, the FTSE100 index hit a new all-time high, reaching 8068 points as market analysts suggest that the Bank of England may cut its interest rates two times this year.

Tesla is going to announce its first quarter financial earnings results (Q1 2024) later today. Tesla shares hit a one-year low last Friday, having fallen over 40% year-to-date. Last week, the US company said that it would fire more than 10% of its workforce, citing restructuring reasons. CEO Elon Musk plans to reveal Tesla’s new project called Robotaxi in August.

Australia CPI Q1 2024 Report

On Wednesday morning, the Australian Bureau of Statistics (ABS) will publish the Q1 2024 CPI inflation data. Economists suggest that headline inflation fell to 3.4% in the first quarter, on a yearly basis. If the forecast was to be confirmed, it would show a substantial drop from the 4.1% figure recorded in the fourth quarter of 2023. 

ING analysts noted in a report released last week that “markets have been scaling back their bets on RBA cuts this year, but this could encourage easing expectations at a time when US Federal Reserve rate cut expectations are being scaled back.”

Bloomberg analysts are pricing in just a 7% chance of 21bp of cuts this year. A report by the National Australia Bank (NAB) said: “On inflation, we expect the Q1 CPI to show a slight pickup in underlying inflation on a quarterly basis, to 0.9%, though the year-ended number will continue to ease to 3.8%. Rents, insurance and other services remain key drivers and while this will not be out of line with the RBA’s forecasts, more improvement will be needed before a first rate cut, which we continue to expect in November this year.”

ECB’s Muller: ECB Careful Not To Move Too Quickly

The European Central Bank (ECB) Governing Council member and the Estonian central bank’s head, Madis Muller, joined the group of ECB policymakers commenting on monetary policy easing.

Muller said that “we should be careful not to move too quickly with the loosening of monetary policy and wait until the data gives us the necessary confidence that inflation is getting sustainably back to the target.” The Estonian banker implied that a June rate cut would be likely, suggesting that the euro bloc’s central bank might not stop there, but also stressed that any moves should be data driven.

More specifically, he noted: “As long as economic developments are in line with our expectations, it is reasonable to expect a few more rate cuts after June by the end of the year. But when and how many will depend on how the economic situation develops as we go along.”

ECB’s de Galhau: No Need To Wait Longer For Rate Cuts

The Bank of France head Francois Villeroy de Galhau said that Middle east geopolitical tension is unlikely to drive up energy prices, therefore it should not affect the European Central Bank’s (ECB) plans to ease its monetary policy in June.

The French policymaker noted: “From the point we have sufficient confidence in the fact that we will meet the 2% inflation objective by next year, our duty is to minimize the cost in terms of activity and employment. That is the sense of a first cut in June. Barring surprises, there is no need to wait much longer. It should be followed by further cuts, at a pragmatic pace.”

Test Your Trading Strategies on an Admirals Risk-Free Demo Account

Are you interested in practising trading without risking your funds? A demo trading account from Admirals allows you to do just that, whilst trading in realistic market conditions. Click the banner below to open a demo account today:

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.