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Top 5 things to watch in markets in the week ahead

Published 03/24/2024, 07:42 AM
Updated 03/24/2024, 07:42 AM
© Reuters

Investing.com -- Investors will be looking ahead to data due out when markets are closed on Friday for the latest read on U.S. inflation. Several Federal Reserve officials, including Chair Jerome Powell, are slated to speak and their comments will be closely watched after last week’s dovish remarks by the Fed head. Here’s what you need to know to start your week.

  1. US data

The U.S. is to release the core personal consumption expenditures price index, the Fed’s preferred gauge of underlying inflation when markets are closed for Good Friday.

The index, which excludes food and energy costs, is forecast to rise 0.3% in February after posting its biggest monthly increase in a year the prior month.

Last week the Fed stuck with projections for three interest rate cuts this year, despite revising up its forecast for economic growth, but adding that official wanted more evidence inflation is slowing before easing.

The economic calendar also features data on new home sales, durable goods orders, revised GDP and the weekly report on initial jobless claims.

  1. Fed speak

Fed Chair Jerome Powell, Atlanta Fed president Raphael Bostic and Fed governors Lisa Cook and Christopher Waller are among some of the Fed officials due to make appearances during the coming week.

"[W]e believe that it is likely that Fed speakers over the coming weeks will lean more on the hawkish side, especially with regard to the long-term path for policy interest rates -- the thing that could be material for the 10-year yield," analysts at Macquarie said in a recent note.

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"Powell's 'dovish' tone came somewhat as a surprise to us, and probably ran counter to the thinking of other Fed policy officials," Macquarie added, flagging the jump in the overnight index swap market pricing in an 85% chance of four cuts in 2024.

But the Fed's updated summary of economic projections showing that the Powell's Fed colleagues are expecting stronger economic growth, higher inflation, and a modest rise in the Fed's longer-term rate offer clues to "what the other Fed officials were thinking," Macquarie says, painting a far less dovish picture than the one delivered by the Fed chief.

  1. Equities

Last week saw the S&P 500 post its largest weekly percentage gain since mid-December, rising 2.3%. The Dow Jones Industrial Average climbed 2%, also its biggest weekly gain since mid-December, while the Nasdaq rose 2.9%, its biggest weekly percentage increase since mid-January.

Some market watchers believe the market is due for a pullback after a run in which the S&P 500 has gained 27% since late October.

Others, however, are betting the trend will continue as investors look beyond the massive growth and technology stocks that have fuelled the U.S. stock market’s gains over the past year.

The wider rally "means that leadership isn't so concentrated and susceptible to a correction," Robert Pavlik, senior portfolio manager at Dakota Wealth told Reuters.

The upcoming end of the first quarter also could prompt volatility as fund managers adjust their portfolios.

  1. Oil prices

Oil prices edged lower on Friday and ended the week little changed as the possibility of a ceasefire in Gaza weighed, while the war in Europe and shrinking U.S. rig count offset losses.

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A possible ceasefire could prompt Yemen's Houthi rebels to allow oil tankers to pass through the Red Sea.

A stronger U.S. dollar also weighed with the greenback posting a second week of gains after the Swiss National Bank's surprise interest rate cut on Thursday bolstered global risk sentiment.

A stronger dollar makes oil more expensive for investors holding other currencies, dampening demand.

"We are still keeping fresh highs on the table given broad-based expansion in risk appetite that accelerated following the mid-week Fed comments that proved less hawkish than anticipated," Houston-based Jim Ritterbusch, of Ritterbusch and Associates told Reuters.

  1. Global inflation

Officials at the Reserve Bank of Australia will be watching Wednesday's inflation figures for any upside surprises, given February's data will capture more price changes for a range of services - which has been declining at a slower pace than for goods.

The figures may underline the case for the RBA to remain in wait-and-see mode for a bit longer before embarking on rate cuts as the economy slows.

Economists are expecting the annual rate of inflation to tick up to 3.5% in February from 3.4% in January.

In Japan, Tokyo is to release inflation figures on Friday, but they may be greeted with less excitement after the Bank of Japan finally hiked interest rates for the first time in 17 years last week.

(Reuters contributed reporting)

Latest comments

Inflation is high, not getting better, and whatever the Feds say is a lie. Speculate until it collapses.
When was the last time you heard anyone at the Fed talk about M/M data LOL
Lol you only mention Core PCE m/m who cares. Everyone looks at Y/Y get real
Julian being extradited priced into data regarding narrative of Ukraine and Russia also Gaza being funded by deep state being priced in?
khnhom min del ban ttuol louy pir anaknea1$te ? ei lau v trauv mk tinh kammovithi tiet at yl
What about Russia attack?
what about it?
What about it? Happens nearly everyday in America do you think Russia cares? They are terrorists and thier invasion of Ukraine has killed far more innocent people
Let me laugh! Do you think the Russian invasion has any meaning!!! 🫢
Market only move up so these articles are useless
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