Last week brought a rebound in stock markets, breaking a series of weeks of losses, along with a weakening USD and falling bond yields. The current one begins in a similar vein.
What are the key events for financial markets and investors in the coming days? In the United States, the employment report may draw attention. In May, the US economy is expected by consensus to add 310,000 jobs. The unemployment rate is likely to remain at 3.6 percent for the third consecutive month, remaining the lowest since February 2020. On the other hand, wages were expected to rise 0.4 percent, which is slightly higher expectations than the 0.3 percent increase in April. On an annual basis, however, it is expected to fall from 5.5 to 5.2 percent.
Several Fed officials will speak on monetary policy this week, and the market has already reduced the chances of US interest rate hikes. At present, investors seem to assume that they may amount to 2.5-2.75 percent in July 2023. As recently as at the beginning of the month, hikes were priced at 3.25-3.5 percent.
The earnings season is underway. Salesforce, Kirkland's, Ambarella, HP and GameStop are expected to announce quarterly results. So far, 97 percent of companies in the S&P 500 index have reported updated results, with 77 percent reporting an EPS surprise and 73 percent reporting a revenue beat, according to Factset data.
From a global monetary policy perspective, the Bank of Canada may raise its interest rate by 50 basis points, marking the third consecutive increase in rates in Canada. Also in focus: first-quarter GDP growth data for Canada. In the UK, on the other hand, final PMI estimates are likely to confirm a sharp slowdown in business activity growth in May amid intensifying inflationary pressures and heightened geopolitical uncertainty.
In Europe, key Eurozone inflation reports will be released, including from Germany, France, Italy and Spain. The Eurozone annual inflation rate is expected to rise again in May, reaching a new record high of 7.7 percent, up from 7.4 percent in April. Unemployment figures will be published in the eurozone, as well as in Germany, Spain and Italy, while France, Italy, Switzerland and Turkey will report updated GDP for the first quarter.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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