Three things to watch for the week ahead: Fed rates; Oz unemployment; Nike earnings

Josh Gilbert, Market Analyst at eToro, shares his three things to watch in Australia in the coming days.

Fed rate decision (Thursday)

In the US this week, a rate cut following the FOMC’s meeting on March 19 is not looking likely, following recent volatility and market uncertainty thanks to President Trump’s tariffs. In a surprising move, US inflation came in lower than anticipated in February, falling from 3% in January to 2.8%. Headline inflation was expected to fall to 2.9%, however, falling gas prices and stable grocery prices led it to drop further unexpectedly.

Although US stocks rallied following the report, current threats of a trade war are making investors and consumers uneasy. With tariffs set to make a number of products more expensive for Americans, the Federal Reserve is likely to be on close watch as the repercussions of Trump’s tariffs become evident over the next few months. If trade war tensions continue to escalate, the view of no rate cuts this year remains a real possibility.

The CME FedWatch tool shows that there is only a 1% chance of a rate cut at this week's meeting. Considering the uncertainty surrounding the impact of Trump’s tariffs on the US economy, Fed Chair Jerome Powell has indicated that the central bank can afford to be patient when adjusting its benchmark interest rate. Although the economic impact of Trump’s recent tariffs and policies remains to be seen, it’s safe to assume there will be no rate cut on the table for the foreseeable future.

AU unemployment (Thursday)

The latest Australian unemployment figures will be released on Thursday, providing insight into how the jobs market fared in February. Unemployment has remained steady around 4% for months now. This has been particularly impressive given the ongoing fight against inflation.

Prior to the rate cut in January, more than 44,000 jobs were added to the economy. Meanwhile, Seek reported that job ads on the platform had actually dropped year-on-year by 7.2%. The forecast from Seek at the time was that job ad volume would be stable in the near future, and high volumes of new jobs in the economy continue to fail to make a significant dent in the month-on-month unemployment rate.

Last month’s Reserve Bank of Australia (RBA) rate cut, a significant milestone after a long period under a cost-of-living crunch, may pull this month’s unemployment figure lower—and almost certainly will have an impact on the March figures set to be released next month. That reduction would be a welcome sign for jobseekers but a concern for economists, as a healthy jobs market could stoke the flames of inflation once more. With Trump’s tariffs casting a shadow over already certain markets, there is valid cause for concern here, and signs that the unemployment rate is shrinking may take a consecutive rate cut off the table in April.

Nike and Lululemon earnings (Friday AM)

Investors may see an opportunity to give their portfolios a workout this week, with iconic athletic brands Nike and Lululemon reporting on Friday AEST.

Nike is expected to disappoint its investors, with a widely assumed drop in earnings and revenue on the cards. The sporting behemoth has had a decent earnings history over the last few years, but the stock itself has struggled since July 2024.

Nike’s direct-to-customer strategy has underwhelmed and seems to have worked against the brand, as it has effectively handed its competitors more real estate in non-Nike-owned retail outlets and platforms. Additionally, consumers seem bored with the brand, with a general sentiment that Nike simply is not innovating or pursuing exciting concepts.

Still, the brand is a stalwart icon across nearly every sporting code and remains firmly ingrained in culture. It has had its share of rough patches before and rebounded just fine, meaning that a price drop from a disappointing earnings call may actually be a good opportunity for investors willing to chip in. Investors will hope that Nike’s new President and CEO Elliott Hill, who has been at the helm for a little over four months, will do more to entice shoppers and turn its affairs around.

Elsewhere, Canadian activewear icon Lululemon has had a turbulent couple of years in markets, with a highly erratic share price and a fair amount of controversy denting the brand. However, its consumers are loyal, and the aspirational quality of the brand has managed to keep it buoyed as it continues to eye global dominance.

The company’s overseas expansion efforts have been palpable, and the effect was evident in its last earnings call, where American sales volumes bumped up by only 2% but rose 33% internationally, which is significant.

Right now, it is regarded as one of the better stocks in its category to buy into. Sure, the share price has been volatile, particularly over the last month, but the brand has strong fundamentals and a strong presence. There is plenty of potential here, even if these upcoming earnings showcase middling results.