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Top 5 things to watch in markets in the week ahead

Published 03/03/2024, 06:36 AM
Updated 03/03/2024, 06:36 AM
© Reuters

Investing.com -- It’s set to be a busy week in in markets with Friday’s U.S. jobs report, testimony by Federal Reserve Chairman Jerome Powell and a European Central Bank policy meeting the main highligts. Here’s what you need to know to start your week.

1. Nonfarm payrolls

Friday’s monthly jobs report will be keenly awaited with investors trying to gauge the timing of the first interest rate cut by the Federal Reserve, with bets currently targeting June amid hopes that the central bank can engineer a soft landing for the economy.

Signs of continued strength in the labor market could make it harder for investors to shrug off concerns about how a stronger-than-expected economy could reignite inflation if the Fed begins easing too soon.

Economists are expecting the economy to have added 190,000 jobs in February after January’s blowout 353,000 gain that was the largest in a year. The unemployment rate is expected to hold steady at 3.7%, while wage growth is expected to have moderated.

2. Powell testimony

Ahead of Friday’s jobs data, investors will get a chance to hear from Fed Chair Jerome Powell in his semiannual testimony on monetary policy before a House committee on Wednesday and a Senate panel on Thursday.

Powell is expected to reiterate that policymakers will stick to a cautious approach in deciding when to begin lowering interest rates given recent data pointing to strength in the economy and persistent price pressures.

Richmond Fed President Thomas Barkin said Friday it is too soon to predict when the central bank will be able to begin to cut its benchmark interest rate, as price pressures still exist in the U.S. economy.

3. Stock market rally

The Dow, the S&P 500 and the Nasdaq notched their fourth straight month of gains in February in a rally largely fueled by growth prospects related to AI, which has also lifted semiconductor names.

The S&P 500 and Nasdaq closed at record highs on Friday and the gains marked the second straight closing record for the Nasdaq, which also set an intraday record, surpassing its prior peak of 16,212.23 set in November 2021.

Markets have also been supported by indications that the economy remains resilient in the face of elevated interest rates.

"Because the economy is doing well and because inflation remains a bit sticky, the Fed will be slower to lower interest rates," Sam Stovall, chief investment strategist at CFRA Research in New York told Reuters.

"But that's good because then we're gradually coming off of the higher interest rate cycle and we're not in need of cutting rates aggressively."

4. ECB decision

The ECB is to meet on Thursday and no policy changes are expected, with investors instead waiting to see whether officials will repeat that it's too early to discuss rate cuts.

The ECB has pushed back on rate cut talk, with officials saying they need to see more evidence that inflation is on track to return to its 2% target, but markets are still expecting Frankfurt to begin cutting rates later this year with a first move expected in June.

Eurozone inflation data on Friday appeared to support the ECB’s cautious stance. Consumer price inflation slowed less than expected in February, while underlying inflation also moderated at a slower than expected pace.

The ECB's big worry is that wage inflation is still too high and risks stoking price pressures for longer.

5. Oil prices

Oil prices rose on Friday and posted weekly gains as traders awaited an OPEC+ decision on supply agreements for the second quarter while also weighing fresh U.S., European and Chinese economic data.

For the week, Brent added around 2.4% following the switch in contract months, while Crude Oil WTI Futures gained more than 4.5%.

A decision by the Organization of the Petroleum Exporting Countries on extending output cuts is expected during the coming week, according to reports, with individual countries expected to announce their decisions.

"The expectation that OPEC+ is going to continue with their voluntary production cuts well into the second quarter of 2024 is the main focus on the market," Andrew Lipow, president of Lipow Oil Associates told Reuters.

Geopolitical tensions in the Red Sea also look set to continue to underpin prices.

--Reuters contributed to this report

Latest comments

FED has done a great job since the pandemic and supply change disruptions. Recovery is still gaining momentum with plenty of jobs for those not too lazy to work.
Fiscal policy has helped too.
jes what's it take ....it's simple, the fed has made it clear they are not cutting rates unless there's a reason to do it.
Markets don't believe you lol
professional traders do, and don't really care....they make money in all markets unlike the amateurs, and those that let their ideology cloud their judgement.
the professional traders do, and really don't care, unlike those that trade, who let their personal ideology affect their trading decisions.
You only cut rates when the economy is doing poorly. Since they claim all is well then no need to cut. We’re being lied to.
Or your premise is wrong.
What about more banks collapsing? Wait...That's great news for stocks right? It means banks are consolidating... kind of like massive layoffs and bankruptcies. lol. Markets are complete FED run joke!
any data is about election protection and pumping liquidity 9nto ths markets lije acivid stimulus. haha so obvious but ride with it
This whole discussion, including the comments below, are missing the point. All this debate over will they or won't they cut is all smoke and mirrors. OF COURSE the Fed will cut. In August or September or October, right before the election, in order to make Biden look good.
They’re probably not going to cut rates anytime sooner than very close to the election because they can’t risk doing that then a higher inflation reading after.
Repiglacons rule and nobody forget it.
IT'S A CONSPIRACY!!!
Fed members are haters because they are ultra conservative unless they have inside information so they aren't really benefitting from this rally lol
Nice week with bullish expected in the futures
Not really !!!
They are such liars. PCE was excellent and Now they are pretending that they have to wait until everything is at 2% before cutting. Well PCE will be below 2% potentially even before the meeting
Any boost from rate cuts have already been baked in.
if rates are cut don't prices of everything keep going up
beware of market euphoria,
  Nima sababdab, stavkalar pasaymaydi deyabsiz tushuntira olasizmi
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