Equity market moons, here are the reasons.

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Stock markets rose sharply on Thursday after a strong signal that inflation is waning. All major indices climbed more than 1%, with Nasdaq Composite rising 2%.

The focus had not deviated from inflation. We have seen the Producer Price Index, PPI, increase by 2.7% yearly, well below the 3% expectation. It also reflected the largest drop in about 3 years. PPI essentially shows the change in producers’ selling prices, and with a recent fall in the company’s cost, it can probably boost profit margin for companies.

Inflation readings give hope for markets.

With a cooler inflation reading on consumer prices, investors are hopeful that the Fed can soon pause hiking interest rates and become a large step closer to the end of its aggressive rate hike cycle, which ultimately targets to dampen economic demand.

There are still lingering concerns that while core goods inflation saw meaningful improvement, service prices maintained their stickiness and hotness, similar to the CPI report. Hence, we should expect a further modest rate hike from the Fed in May FOMC.

Debt ceiling simmering in focus

Also, the debt ceiling fight has some good news. There is a report that House Speaker Kevin McCarthy is leading the role to suspend the debt ceiling till May 2024. If a deal is reached between the Democrats and Republicans, it will be a powerful force for the market, as animal spirits are unleashed to remove the major overhang on markets.

Nonetheless, some experts called for cautious optimism as a deal is far from reaching the end goal. We can expect McCarthy to speak about this debt ceiling when he makes an address to the NYSE on Monday, according to some reports. So, let’s wait eagerly for an update.

What to look out for in earnings season?

There are two main things: how inflation and the current high-interest rate environment eat the profit margin for businesses. That’s the key highlight with potential guidance from business leaders. Other factors could just be melody or noise in the background.

What’s on the menu today?

At 8.30 pm, we will have the Core Retails Sales for MoM. We should expect a deeper decline by 0.3% compared to a drop of 0.1% in the prior period.

Retail sales should also fall by 0.4%, similar to the magnitude seen in the prior period.

Fed Wallers will also speak at 8.45 pm. Hence, watch out for any hint on the future monetary policy path.

Then at 9.15 pm, we will welcome the Industrial Production date, which should see a smaller jump of 0.2% compared to 0.3% previously.

Finally, at 10 pm, we will have the Michigan Consumer Sentiment for April. A small uptick from 59.2 to 60.0 is expected.

Then, before the market opens, major banks earning will arrive, such as JP Morgan and Citibank. This will shape the narrative of this bull market.

It is 14 April, Friday, 9 am in Singapore and 9 pm in New York. As our night analysis report showed, the SPY and QQQ had a good upswing and break short-term resistance. A further rise can be expected with the SPY hitting the short-term resistance of 413.5 and possibly aiming for 416 in our previous graph shown below if no shocks to earnings or economic data arise.