Economy in the world: Critical week in the markets
While uncertainty continues about when the Fed will start its first interest rate cut in global markets this week, a mixed trend is observed; eyes will be on next week for US employment data abroad and inflation data domestically.
As it is considered that important central banks worldwide have come to the end of their “hawkish” policy steps in the fight against inflation, uncertainty remains about when interest rate cuts will begin. This situation is dulling risk appetite in global markets.
The cautious tone in the guidance of Fed officials, along with uncertainties about the timing and pace of interest rate cuts expected to start by the Federal Reserve (Fed) this year, has helped increase selling pressure in equity markets.
Analysts have stated that the persistence of strong economic activity in the US has limited the policy space of the Fed, which is reflected in the verbal guidance of Fed officials.
On Monday of next week, Purchasing Managers’ Index (PMI) for manufacturing industry, ISM manufacturing PMI, construction spending will be followed, factory orders on Tuesday, durable goods orders, ADP employment report on Wednesday, service sector PMI, ISM service sector PMI, foreign trade balance on Thursday, weekly jobless claims, and on Friday non-farm employment and unemployment data will be followed.
Inflation data will be followed in Europe
While a positive trend is observed in European stock markets, the verbal guidance of central bank officials in the region and the macroeconomic data agenda continue to be the focus of investors.
Chief Economist of the European Central Bank (ECB), has stated that there is a growing consensus in the ECB Governing Council for a possible interest rate cut and that his confidence in the slowing wage growth has increased.
Analysts reported that it is uncertain when the ECB and the Bank of England (BoE) will start interest rate cuts, but it is highlighted that there is a possibility of both banks making their first interest rate cuts at the June meeting in the pricing in the money markets.
On Tuesday next week, PMI for manufacturing industry in the Eurozone and Germany, inflation in Germany, inflation and unemployment in the Eurozone on Wednesday, PMI for service sector in the Eurozone and Germany on Thursday, Producer Price Index in the Eurozone, and on Friday retail sales data will be announced in the Eurozone.
