Top 5 Things To Watch In The Markets In The Week Ahead By Investing.com

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by Noreen Burke

Investing.com — With a turbulent month in equity markets drawing to a close, investors will be keeping an eye on Friday’s nonfarm payrolls report, which could help set the market tone for June. Recent encouraging economic data has fueled hopes that the Federal Reserve can tighten monetary policy without pushing the economy into recession. Investors will also look to China’s PMI data, amid growing concerns about the economic outlook for the world’s second-largest economy hit by COVID restrictions. Meanwhile, euro zone inflation data due out on Tuesday is expected to hit a new record high, cementing expectations that the European Central Bank will launch its own rate-hike cycle. Here’s what you need to know to start your week.

  1. Non-Farm Payrolls

Friday’s nonfarm payrolls data for May is expected to show the labor market remains strong, and economists expect the economy to have added jobs in May, slowing from 428,000 in April. While still strong, it would represent the slowest job growth in about a year.

Wage growth is expected to remain strong amid a labor shortage and the unemployment rate is expected to decline to .

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

ISM data and sector activity will be in the spotlight amid concerns about the impact of rising prices and supply chain issues. There will also be a report on .

  1. Actions to extend recovery?

US stock markets rallied on Friday, with all three major indices snapping their longest weekly losing streak in decades, after better-than-expected economic data added to hopes the Fed doesn’t need to tighten. monetary policy as much as previously feared.

Data on Friday showed that it increased more than expected in April and also indicated that inflation slowed.

The data on consumer spending came after the Fed’s May meeting last Wednesday showed that “several” policymakers thought “monthly data may suggest that overall price pressures are no longer getting worse.”

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

Some market analysts now believe that concerns about the economic impact of higher rates at a time when inflation may have peaked means the central bank could do so in September.

US stock markets will be closed on Monday in observance of Memorial Day.

3. federal speech

Investors will have the opportunity to hear from various Fed policymakers on the economic outlook in the coming week.

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

The Fed is also due to release its latest report on Wednesday, which looks at local economic conditions in each of the 12 Fed districts.

  1. Chinese PMIs

China’s economy has shown signs of recovery this month after falling in April, but activity is weaker than last year and many analysts expect a contraction in the second quarter.

Investors are concerned about the lack of a roadmap to exit the country’s zero-COVID strategy, which runs counter to trends seen in other parts of the world.

Beijing will release forward-looking estimates on Tuesday and Wednesday, which economists expect to remain below 50, pointing to a monthly contraction in May.

China has already unveiled a comprehensive package of measures aimed at boosting the economy, and Premier Li Keqiang promised detailed guidelines for its implementation shortly.

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

  1. eurozone inflation

The euro zone is to release its latest flash inflation estimate on Tuesday, and economists expect the consumer price index to hit another record high in May, up from 7.4% in April.

That would consolidate expectations of policy normalization at the ECB, which is due to hold its next meeting on June 9.

Economists and markets are expecting a quarter percentage rate hike in July, but a very strong inflation reading could fuel talk of a bigger move, which some ECB officials are in favor of.

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

–Reuters contributed to this report

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