This week, financial markets will focus on Eurozone CPI flash data for insight into the ECB's interest rate path, while the Fed's monetary policy meeting will also be in the spotlight to gauge investment sentiment.
advertisementFinancial markets are gearing up for an exciting week ahead, including preliminary Eurozone CPI, Fed interest rate decisions and US non-farm employment data. Eurozone inflation data will shape the European Central Bank's interest rate outlook, while the Fed's comments on monetary policy will have important implications for the direction of global markets. Additionally, earnings season continues with reports from HSBC, Amazon, and Apple, providing insight into the health of international companies.
Europe
This week, market attention will be on the EU Consumer Price Index (CPI) estimates for April. This data is expected to provide valuable insight into the region's inflation trajectory, thereby influencing European Central Bank (ECB) interest rate decisions. Inflation fell to a four-month low of 2.4% in March, sparking speculation that the central bank could start cutting interest rates as early as June this year. However, recent global inflation trends have picked up again due to soaring commodity prices. Market consensus expects euro area headline CPI to remain flat at 2.4% in April, while core CPI excluding food and energy is expected to decline slightly to 2.8% from 2.9% in the previous month. There is. The data could strengthen expectations for a June interest rate cut, especially amid the Fed's relatively hawkish stance, and put downward pressure on the EUR/USD against the US dollar. Nevertheless, the prospect of subdued inflation and continued expectations for interest rate cuts could continue to buoy European stock markets.
Additionally, this week, major EU member states including Spain, Italy, France and Germany are expected to release preliminary GDP figures for the first quarter. Among these countries, Germany has shown the weakest growth, in contrast to Spain's remarkable resilience. Germany's economy stagnated in 2023, with GDP growth contracting by 0.3% in the final quarter. The country has revised down its GDP forecast for 2024, with the growth rate for that year expected to be just 0.2%, down from the previous forecast of 1.3%. Factors such as the unstable global economic environment, declining demand in China, and high interest rates are expected to continue to impact economic performance. In contrast, Spain's GDP expanded by 2.5% in 2023, and the International Monetary Fund (IMF) raised its 2024 growth forecast for the country from 1.5% to 1.9%. Despite global challenges, Spain's economy is showing resilience, supported by a strong economy. Improving domestic demand and employment conditions.
On the earnings side, investors will closely monitor HSBC's first quarter results and Glencore's first quarter production report. European stock markets have shown greater resilience compared to US stock markets, mainly due to the strong performance of banking and mining stocks. Upcoming reports from HSBC and Glencore will provide valuable insight into the performance of these important sectors, giving investors a clearer understanding of their trajectory and potential impact on the broader market. Masu.
America
The Fed's interest rate decisions are extremely important events for global markets, as they are considered a leading indicator of other central banks' interest rate paths. In light of stagnant inflation over the past two months, the Federal Reserve reiterated its efforts to raise long-term interest rates earlier this month. According to the CME Fed Watch Tool, market expectations have changed and he is now expected to cut rates only once in 2024, whereas previously he was expected to cut rates three times. The Federal Reserve kept interest rates unchanged for the fifth time in a row in March, from 5.25% to 5.5%, the highest level in decades. There is no expectation that the Fed will adjust interest rates at its next meeting, but a hawkish tone could dampen recent gains in U.S. markets, and a dovish stance could backfire. Investors will be closely monitoring the Fed's comments for clues about future policy direction and the impact on market sentiment.
Given that employment is one of the key mandates guiding the Fed's policy decisions, along with inflation, another important economic indicator to watch will be April's nonfarm employment report. The US labor market was tight in March, with the unemployment rate dropping to 3.8% from 3.9% the previous month. When a market approaches full employment, it typically stimulates consumer spending and creates sustained inflationary pressures. This data provides important insights into the health of the labor market and its potential impact on inflation and monetary policy.
Additionally, Apple and Amazon will be the last major tech companies to report earnings before Nvidia's earnings in late May. Apple recently relinquished its position as the largest company by market capitalization, falling behind Microsoft in part due to perceived flaws in its AI development. However, if expectations weaken, there could be an unexpected upside to quarterly results. Investors will be closely watching these earnings releases for insight into the current performance and future prospects of these technology giants.
Asia
China's stock market has performed well over the past week, with the benchmark Hang Seng index up nearly 9%. This week, all eyes will be on China's Manufacturing and Services Purchasing Managers' Index (PMI), which has a significant impact on global commodity prices. The expansion in manufacturing activity in March marked a notable turning point, signaling stronger economic growth in the world's second-largest economy. These PMI numbers will be closely monitored for further insight into the trajectory of China's economy and its potential impact on global markets.
In addition, Australian retail sales data and New Zealand employment statistics will be central to their respective economies.
