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Top 5 Markets to Watch for Next Week By

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by Noreen Burke – With a tumultuous month in equity markets coming to an end, investors will be looking forward to Friday’s nonfarm payrolls report, which could help set the market for June. Recent encouraging economic data have sparked hopes that the Federal Reserve can tighten monetary policy without pushing the economy into recession. Investors will also look to PMI data from China amid growing concerns over the economic outlook for the world’s second-largest economy affected by COVID restrictions. Meanwhile, Eurozone inflation data, due Tuesday, are expected to hit a new record high, which will bolster expectations for the European Central Bank to launch its own rate hike cycle. Here’s what you need to know to start the week.

  1. Non-farm payrolls

Friday’s May non-farm payroll data is expected to show that the labor market remains strong. While still solid, it will represent the smallest employment growth in about a year.

Due to the shortage of workers, the increase in wages remained intact and the unemployment rate .

The economic calendar also includes a closely monitored demand indicator in the labor market and data on weekly figures.

ISM data and industry activity will be at the forefront amid concerns over the impact of rising prices and supply chain issues. There will also be a report.

  1. Stocks to prolong recovery?

U.S. stock markets rallied on Friday as all three major indices hit their longest weekly losses in decades, after better-than-expected economic data raised hopes the Fed may not need to tighten monetary policy as much as previously feared.

Data released on Friday showed that April rose more than expected and inflation slowed.

The consumer spending data comes after the Fed’s May meeting showed last Wednesday that “a number of” policymakers thought “monthly data shows that overall price pressures may no longer be worsening”.

The Fed has raised interest rates by 75 basis points so far this year, and markets are pricing in 50 basis points increases in June and July.

Some market analysts think that at a time when inflation is at its peak, concerns about the economic impact of higher rates mean the central bank may do so in September.

US stock markets will remain closed on Monday for Memorial Day.

3. Speech

Investors will have a chance to hear from several Fed policymakers about the economic outlook next week.

Fed Chairman Christopher will speak on Monday, while New York Fed Chairman John and a famous hawk, St. Louis Fed President James will speak on Wednesday, followed by Cleveland Fed President Loretta a day later.

The Fed will also release its final report on Wednesday, which looks at local economic conditions in each of the Fed’s 12 regions.

  1. Chinese PMIs

The Chinese economy has shown signs of recovery this month after a decline in April, but activity is weaker than last year and many analysts are expecting a contraction in the second quarter.

Investors are concerned that the country lacks a roadmap to exit its zero-COVID strategy, which goes against trends seen in other parts of the world.

Beijing will release the and s on Tuesday and Wednesday, which economists expect to stay below 50, pointing to a monthly contraction in May.

China has already announced a broad package of measures aimed at boosting the economy, and Prime Minister Li Keqiang has promised detailed guidelines for their implementation soon.

Shanghai was in a two-month lockdown on June 1, while Beijing reopened parts of public transport and some shopping malls on Sunday as infections stabilized.

  1. eurozone inflation

Economists expect the consumer price index to rise to a record high in May from 7.4% in April.

This will strengthen expectations for policy normalization at the ECB, which will hold its next meeting on 9 June.

Economists and markets expect a quarter-percent rate hike in July, but a very strong inflation reading could spark talk of a larger move favored by some ECB officials.

ECB President Christine Lagarde said the deposit rate should start rising in July and could be at zero or “just above” by the end of September before rising even higher “towards the neutral rate”.

–Reuters contributed to this report

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