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Top 5 things to watch in markets in the week ahead

Published 04/28/2024, 04:52 AM
© Reuters

Investing.com -- It’s set to be another hectic week in markets with the Federal Reserve’s latest policy meeting front and center. The U.S. is to release its latest employment report on Friday and the last of the "Magnificent Seven" big tech names are to report earnings. Meanwhile the euro zone and China are to release what will be closely watched economic data. Here’s what you need to know to start your week.

1. Fed decision

Investors will be awaiting indications about whether the Fed still expects to cut interest rates at some stage this year when officials conclude their two-day policy meeting on Wednesday. Fed Chair Jerome Powell has said the central bank needs more confidence that inflation is heading towards its 2% goal before cutting rates.

Friday’s inflation data for March, which was broadly in line with consensus, did little to alter market expectations for a first rate cut in September.

Expectations for interest rate cuts have faded as data on the labor market and inflation continued to surprise on the upside. Financial markets initially expected the first rate cut to come in March. That expectation got pushed back to June and then September.

2. Nonfarm payrolls

Friday’s monthly jobs report will give a fresh look at the strength of the U.S. labor market, with economists expecting the economy to have added 243,000 jobs in April, moderating from 303,000 in March. The unemployment rate is expected to remain steady at 3.8%.

Ahead of Friday, there will be ADP data on private sector hiring as well as the report on JOLTS job openings and other survey data that will help firm up expectations.

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Investors will also be looking to Tuesday’s data on the employment cost index for signs that inflation pressures arising from the labor market continue to cool.

3. Tech earnings

The last of the "Magnificent Seven" megacaps that drove markets higher last year to report are Amazon (NASDAQ:AMZN), on Tuesday, and Apple, on Thursday.

Apple shares (NASDAQ:AAPL) have tumbled over 10% so far this year and the iPhone maker is expected to post a decline in first quarter earnings after China smartphone shipments fell 19%.

Amazon's cloud computing business will be in focus while investors will also be watching what the online retailing giant has to say about consumer spending.

Solid reports from Microsoft (NASDAQ:MSFT) and Google parent Alphabet (NASDAQ:GOOGL) on Thursday helped the S&P 500 register its biggest weekly gain since November.

But some of their peers such as Tesla (NASDAQ:TSLA) and Facebook parent Meta Platforms (NASDAQ:META) have given a mixed performance.

"We cautioned that potential earnings beats might not lead to equity upside during the results season, given the already strong equities run leading up to the earnings season, and stretched positioning...," JPMorgan analysts said in a note. "Indeed, stock price reactions in the US (have) been underwhelming so far."

4. China PMI data

Market watchers will be looking to Chinese manufacturing data for April for signs that a long-awaited recovery in the world's second largest economy is gathering momentum after last months stronger than expected data.

Official figures for China's purchasing managers' index are due on Tuesday, followed shortly afterwards by the Caixin/S&P Global manufacturing PMI.

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Upbeat data would be a relief to policymakers who have been trying to shore up growth and bolster investor sentiment.

Global investment houses have turned increasingly bullish on Chinese stocks, helping the blue-chip index tack on more than 10% from a February trough. But Beijing has lately found itself in a bind over its currency. The yuan is sliding against a robust dollar but is stronger against its major trading partners - an unwelcome sign for China's export-dependent economy.

5. Eurozone data

The eurozone is to release inflation and economic growth data on Tuesday which will likely strengthen market bets for a June rate cut by the European Central Bank.

Inflation has fallen quickly over the past year and the ECB has indicated it plans to cut rates in June, but the longer-term outlook remains clouded by rising energy costs, stubbornly high services inflation and continued geopolitical tensions that threaten to disrupt trade.

Economists are expecting the bloc’s gross domestic product to have expanded by just 0.2% in the first quarter, on a year-over-year basis.

Progress on inflation is expected to have stalled with consumer prices expected to have risen by 2.4% in April, matching the previous month amid rising energy costs.

(Reuters contributed reporting)

Latest comments

Last of the Magnificent 7, oops forgot about NVDA
Why doesn't Powell and the FED just come out and say they wont cut rates until inflation is 2%? Its already 2.5% from 9% how much more confidence can you possibly need?
They have but nobody listens
I do not think he will unless just before election, to make more favorable for Biden to get more vote ticket. It is now a political game!
It’s not at 2.5 % logically if you create more than 2 % of you money supply you will have higher than 2 percent inflation. Look how uch money the fed created in the last five years.
Market only goes up regardless... people could be dying, in war or recession and markets go up
Bonjour Sana
Bonjour
money
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