Investing.com -- This week's Federal Reserve meeting will be the major focus this week, although the Bank of Japan and the Bank of England also hold rate-setting meetings. Apple and Google are reportedly discussing an AI deal, while Nvidia hosts its latest developer conference.
1. Fed meeting looms large
It’s central bank week this week, with central banks in a number of major industrialized nations set to meet.
The main focus, however, will be on the Federal Reserve, which starts its two-day policy-setting meeting on Tuesday, with its announcement due on Wednesday.
The U.S. central bank is widely expected to keep rates unchanged, after Fed Chair Jerome Powell said earlier this month that officials want more evidence that inflation is slowing before they begin easing.
Hotter-than-expected U.S. producer and consumer price data have prompted traders to rein in bets on future cuts from the Fed, and they will be looking for more clues on the central bank's outlook for rate cuts, the resilience of the U.S. economy and the possibility of an inflationary rebound.
The Bank of Japan also meets on Tuesday, amid speculation that officials are set to decide whether to end eight years of negative interest rates in what would mark a landmark shift away from its huge stimulus program.
It’s Thursday that the Bank of England officials gather together, and is expected to stand pat on interest rates as it awaits greater clarity on wage growth, which remains stronger than in the U.S. or the euro zone.
Markets are currently expecting the BoE to start cutting borrowing costs from 5.25% - the highest since 2008 - in August, after both the Fed and the European Central Bank.
2. Futures mixed; Fed meeting limits activity
U.S. stock futures traded mostly higher Monday, ahead of the start of the Federal Reserve’s latest policy-setting meeting which could offer clues of the central bank's outlook for rate cuts.
By 04:55 ET (08:55 GMT), the Dow futures contract was largely unchanged, while S&P 500 futures rose 20 points or 0.4%, and Nasdaq 100 futures had fallen by 135 points or 0.8%.
The Fed meeting [see above] dominates the week’s activity, with the major indices coming off a two-week losing streak after hotter-than-expected February core and wholesale inflation readings prompted traders to rein in bets on future interest rate cuts.
The earnings season has largely finished, but there are still results from chipmaker Micron Technology (NASDAQ:MU) and shipping giant FedEx (NYSE:FDX) to be studied this week.
3. Apple in talks with Google over AI in iPhones
Apple (NASDAQ:AAPL) is in talks with Alphabet (NASDAQ:GOOGL)'s Google to incorporate AI features into its flagship iPhones, Bloomberg reported on Monday.
The two parties are in active negotiations to let Apple license Google’s Gemini artificial intelligence engine into the iPhone, according to the news agency, citing people familiar with the matter.
The negotiations between Apple and Google were still in early stages, and the two had not decided on any agreement or branding. Apple currently has a deal with Google under which the latter's search engine is the default search engine for Apple's Safari web browser.
The iPhone maker has somewhat lagged its peers in rolling out AI features for its flagship offerings - features which rivals Samsung Electronics (KS:005930) and Google have already incorporated in recent months.
4. Nvidia developer conference due
The latest Nvidia (NASDAQ:NVDA) GTC developer conference is scheduled to start later Monday - the first such event to be held in person after the COVID-19 pandemic.
The firm, which is at the heart of an AI-driven market rally over the past year, is widely expected to unveil its new flagship chips catered specifically for AI development.
Nvidia has been one of the most sought after companies over the past year or so, with its gains for the year to date having already added $1 trillion to the company’s market valuation, catapulting it into a position as the top-performing stock in the S&P 500 Index.
The stock has seen some volatility since a record high close on March 7, and investors will be undoubtedly keen to hear any AI-related announcements that could trigger fresh gains.
5. Oil helped by strong Chinese data
Oil prices rose Monday, extending last week’s gains on the prospect of tighter global supplies, ahead of a string of key central bank meetings this week, headed up by the Federal Reserve.
By 04:55 ET, the U.S. crude futures traded 0.7% higher at $81.17 a barrel, while the Brent contract climbed 0.7% to $85.92 per barrel.
The crude market soared to four-month highs last week, following signs of strong U.S. refinery demand, attacks on Russian energy infrastructure and positive forecasts from the Organization of Petroleum Exporting Countries and the International Energy Administration.
This positive tone was helped as Chinese data surprised on the upside, as industrial output climbed an annual 7% over January and February, while retail sales rose 5.5% on a year earlier, according to data released earlier Monday.
However, gains were limited Monday as traders awaited a number of key central bank meetings this week, most notably the Fed.