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Top 5 Things to Watch in Markets in the Week Ahead

Published 03/20/2022, 08:26 AM
Updated 03/20/2022, 08:27 AM
© Reuters

By Noreen Burke

Investing.com -- With a long-awaited rate hike from the Federal Reserve out of the way investors will be looking to see whether stocks are set for a sustained recovery or if more turbulence awaits. The war in Ukraine will remain in focus, with markets continuing to monitor headlines. Oil markets are calmer but concerns over supply shortages remain to the fore. The economic calendar is light but there will be two appearances from Fed Chair Jerome Powell during the week, while the Eurozone and the U.K. are to release PMI data. Here’s what you need to know to start your week.

  1. Stocks to sustain upswing?

U.S. stocks stormed back last week after the Fed delivered its first rate hike since 2018 along with an encouraging assessment of the U.S. economy.

Wall Street's three main indexes notched up their largest weekly percentage gains since early November 2020 with the Dow climbing 5.5%, the S&P 500 adding 6.2% and the Nasdaq rising 8.2%.

But investors must now wrestle with the question of whether the Fed will be able to fight soaring inflation without pushing the economy into recession.

Last week JPMorgan forecast the S&P 500 would end the year at 4,900, about 10% above Friday’s close, saying that markets “have now cleared the much-anticipated Fed liftoff with policy likely as hawkish as it gets."

But concerns over stubbornly high inflation, sky-high commodity prices and few signs of an end to the war in Ukraine are continuing to cloud the outlook for investors.

  1. Ukraine war

Market watchers will continue to monitor the course of the war in Ukraine and headlines could continue to cause market turbulence in the upcoming week. Diplomacy efforts are ongoing even as Russian strikes on Ukrainian cities continue.

U.S. President Joe Biden is to join a NATO meeting on Wednesday and also a mid-week EU summit in Brussels, aiming to cement the new-found cohesiveness with European allies.

The West is risking rifts with China and India, which have not condemned Russia’s invasion of Ukraine.

On Friday, Biden warned his Chinese counterpart, Xi Jinping, of "consequences" if Beijing gave material support to Russia's invasion of Ukraine.

China has not condemned Russia's actions, though it has expressed concern about the war.

Chinese Vice Foreign Minister Le Yucheng said on Saturday that Western sanctions against Russia were "outrageous."

  1. Fedspeak

On Monday, Fed Chair Jerome Powell is to speak about the economic outlook at the annual conference of the National Association for Business Economics, less than a week after the Fed kicked off what is expected to be an aggressive monetary policy tightening cycle.

On Wednesday, Powell is to participate in a virtual panel discussion at a summit hosted by the Bank for International Settlements.

Several other Fed officials are also due to make speeches during the week, including New York Fed President John Williams, San Francisco Fed President Mary Daly, Cleveland Fed President Loretta Mester, Minneapolis Fed President Neel Kashkari, Fed Governor Christopher Waller and Chicago Fed President Charles Evans.

The U.S. economic calendar is relatively light and will feature reports on durable goods orders, initial jobless claims, both new and pending home sales, as well as services and manufacturing PMI data.

  1. Oil prices

Last week oil prices recorded a second consecutive weekly decline, with both Brent and U.S. crude ending the week down about 4%.

Oil prices have been on a roller coaster ride, hitting the highest levels in 14 years two weeks ago, boosted by the supply crunch from traders avoiding Russian barrels and dwindling oil stockpiles.

But prices were pressured by worries about demand after a surge in coronavirus cases in China, while faltering nuclear talks with Iran have been a wild card on the market.

The International Energy Agency has said oil markets could lose 3 million bpd of Russian oil from April. That loss would be far greater than an expected drop in demand resulting from higher fuel prices, the IEA said.

The Ukraine crisis has exacerbated the issue of limited output capacity. The world is set for a supply deficit of 700,000 bpd in the second quarter, the IEA has said.

  1. Eurozone, U.K. PMIs

The Eurozone and the U.K. are to release PMI data for March that will be a litmus test of sorts of the impact from the war in Ukraine.

Generally, PMIs have held above the 50-mark that divides contraction from expansion. But after the ZEW index showed a record slump in German investor morale in March, a recession in the euro area’s largest economy cannot be ruled out.

Markets shrugged off the slump in the ZEW index, focusing instead on efforts by central banks to curb inflation.

But as soaring energy costs squeeze household spending, a downbeat batch of PMIs might set off alarm bells.

--Reuters contributed to this report

Latest comments

Hi
Walmart emailed.China...don't mess this up we need our summer flip.flops.and inflatables!
Don't be another Chad!
You burn with oil and you burn on Tesla. Time to go long.
Doomsday shorts, the Doomsday is nowhere near - not enough people had died. Close your short positions asap and reinitiate your long investments.
Doomsday shorts, Tesla puts bled so bad end of last week. Close your positions asap.
Doomsday shorts, game over, close your positions
Is this where the failed investor Chads come to whinge?
Don't be another Chad
Consumers and industrial companies also others are worrisome if Brent Oil tops 125 dollars in the coming weeks?
Seems the Russians (fake republicans) are still trying to stir think up in USA. Really wish we could pull the plug on those guys.
You are kind of missing the plot Armani. ;) There is a despot trying to take over a country that holds democratic elections.
Putin is not a despot, he is a strong leader just like trump. As Republicans say "Democratic elections are highly overrated because the people don't know what's good for them."
putin is a ***ing piece of trash. he is a little baby back ***child.
If he is suchastrong leader, why does he go after women and children and civilians instead of Ukranian soldiers??? I highly recomnend Alpha Brain supplaments my man, they work and to me it seems lime maybe you can use them??? Just saying??? You can gst them on Amazon !!!!
If there is no money to push market and rate increase to 2% at LEAST. PRICE OVER EARNING ARE WELL OVER THE HYSTERICAL MAX. WHY MARKET SHOULD GO UP??
because yield curve didn't invert yet so no recession yet simple
S&P500 at 4900 EOY is very resonable. Recession, inflation, war, and doomsday shorts, close your positions.
S&P500 at 4900 EOY is very resonable. War, recession, and inflation shorts, close your positions.
China decided not to ruin their economy, wise decision!
Yeah who gives a fk about Russian slvts ?!
Unlike the West, Russia has nothing to offer China but possy. You're a naive sub-continent. A day will come when you pay a dear price for your position of the Russian invasion.
Russia has nothing to offer China but po. ssy
great report!!!!
great report!!!!
dow gonna loose 500 point
China says sanctions are outrageous but stays silent while Russia targets women and children/baby's
The world is at a tipping point on many different levels, but what we do know is that all the financial instruments cannot be at all-time highs or elevated at the same time. Stocks, commodities, real estate, crypto, etc are all elevated by the the collective Central Bank stimulus over the last 14 years (since 2008 crash) cheap money for that long has created numerous problem areas that now must be addressed. Of course inflation is finally running rampant, and of course the Central Banks are now backed into a corner to raise rates.. this “soft landing” will not be so soft. We all need to be prepared for the next surprise.. good luck everyone
Most cryptos are 50% down from ATH.
I hope you liquidated everything and went back to a savings account?
and to be prepared watch the yield curve easy:)
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