Top 5 Things to Watch in the Markets in the Next Week By Investing.com
Written by Noreen Burke
Investing.com – With a turbulent month in stock markets coming to a close, investors will be looking forward to Friday’s non-farm payrolls report that may help set the market tone for June. Recent encouraging economic data has raised hopes that the Federal Reserve will be able to tighten monetary policy without pushing the economy into recession. Investors will also be looking forward to PMI data from China, amid growing concerns about the economic outlook for the world’s second-largest economy hit by COVID restrictions. Meanwhile, Eurozone inflation data released on Tuesday is expected to hit a new record high, bolstering expectations that the European Central Bank will start its own interest rate raising cycle. Here’s what you need to know to start your week.
- non-farm jobs
Nonfarm payrolls data for May on Friday is expected to show that the labor market remains strong, with economists forecasting that the economy added jobs in May, slowing from 428,000 in April. While still steady, it would represent the smallest job growth in about a year.
Wage growth is expected to remain strong amid a labor shortage and the unemployment rate is expected to fall to .
The economic calendar also includes data on , a closely watched indicator of labor market demand and weekly figures on .
ISM data and sectoral activity will be in the spotlight amid concerns about the impact of higher prices and supply chain issues. There will also be a report on.
- Stocks to extend the recovery?
US stock markets rebounded on Friday, with all three major indexes snapping their longest weekly losing streak in decades, after better-than-expected economic data added to hopes that the Federal Reserve may not need to tighten monetary policy as much as previously feared.
Friday’s data showed a more-than-expected rise in April, and also indicated slowing inflation.
Consumer spending data came after last Wednesday’s May meeting at the Federal Reserve showed that “a number” of policy makers believe that “monthly data may indicate that overall price pressures may not worsen.”
The Fed has raised rates by 75 basis points so far this year, and markets are pricing in 50 basis point rate increases 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 be in September.
US stock markets will remain closed on Monday in observance of Memorial Day.
Investors will get a chance to hear from several Fed policy makers regarding the economic outlook in the coming week.
Fed Governor Christopher is scheduled to speak on Monday, while New York Fed President John and St. Louis Fed President James, a prominent hawk, are scheduled to speak on Wednesday, followed the next day by Fed Chair Federal Reserve in Cleveland Loretta.
The Fed is also due to publish its latest report on Wednesday, which looks at local economic conditions in each of the Fed’s 12 regions.
- Chinese PMIs
China’s economy showed signs of recovery this month in the wake of the April recession 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 COVID-free strategy, which runs counter to trends we’re seeing in other parts of the world.
Beijing is publishing future forecasts on Tuesday and Wednesday that economists expect will remain below 50, indicating a monthly contraction in May.
China has already unveiled a wide range of measures aimed at boosting the economy, and Premier Li Keqiang has promised detailed guidelines for their implementation soon.
Shanghai was closed for two months on June 1, while Beijing reopened some parts of public transport on Sunday as well as some shopping malls as infections stabilized.
- Eurozone inflation
The eurozone will publish its latest flash inflation estimate on Tuesday, with economists expecting the consumer price index to hit another record in May, up from 7.4% in April.
That should bolster expectations of policy normalization at the European Central Bank, which is scheduled to hold its next meeting on June 9.
Economists and markets expect a quarter-percentage increase in July, but the strong inflation reading may fuel talk of a bigger move, which some ECB officials support.
European Central Bank President Christine Lagarde said the deposit rate should start rising in July and could be at zero or “a little bit higher” by the end of September before rising further “towards the neutral rate”.
–Reuters contributed to this report