Written by Daniel Schwarzman
Investing.com – Stock markets ended the first week of June lower, as a strong US jobs report indicated that the Federal Reserve and other central banks could continue their monetary tightening policy, at the expense of risky assets.
This week comes with CPI reports in the US, where inflation remains the biggest concern at the Federal Reserve and other central banks. The European Central Bank meets this week amid expectations of policy normalization. With oil prices closing higher last week and a torrent of corporate clamor about pulling off the next storm, alerts abound that a soft economic downturn may be hard to come by, no matter how strong the consumer.
Here’s what to watch in the markets for the week ahead:
1. US Consumer Price Index Report
Friday’s US CPI report for May comes a few days before the next Federal Reserve meeting, and will serve as final input before the Fed decides. Inflation is expected to reach 8.3% on an annual basis, while core inflation (excluding energy and fuel prices) is expected to reach 5.9% on an annual basis. The latest figure marks the third month of consecutive declines and suggests that core inflation may have peaked, which may reflect slower wage growth in last week’s jobs report. At the same time, the overall inflation figure of 8.3% will be close to the peak, and given the pain, consumers may not find much solace in knowing that the core figure is stabilizing.
2. European Central Bank meeting
As central banks around the world begin their rate-raising cycle, the European Central Bank is seen as a step or two away from that. However, eurozone inflation has added more urgency to the discussion, and analysts expect to make it clear that a rate hike will come in the third quarter.
Christine Lagarde, President of the European Central Bank, said the same in a blog post, so both the following “and” will provide an opportunity for Lagarde to point the way back to positive interest rates and reassert the bank’s credibility. It is up 1.67% since the end of April and 3.55% from its lows in mid-May, indicating that the bank has regained at least a little of that credibility with the markets.
3. The next trend of oil
The announced 50% increase in OPEC+ production did not slow the rally in crude, with the week ending at $120 a barrel. Despite the rumble of the slowdown, (PMIs) indicate that oil demand will remain high, and there are doubts that OPEC production will increase or even be fully realized.
Next week, all eyes will be on whether US President Joe Biden will decide to meet with Saudi Crown Prince Mohammed bin Salman amid human rights concerns. As we enter the summer travel season, weekly Crude Oil and Gasoline stocks will be significant, and likely to align with Michigan, with readings approaching 2008-2009 lows (admittedly, lows were also seen in the 2011 debt ceiling crisis). , a reminder that surveys can reflect political sentiment as much as anything else.)
4. Q1 earnings season reaches home level
While we’re going through most of our first quarter earnings season, a few big names have reported numbers this week that will provide a full read on various investment topics.
DocuSign Company (NASDAQ 🙂 prepares to announce Thursday after the bell; Software as a service highflyer was previously one of the first to start warning of slowing activity, and now investors may be hoping it will join the recent rebound seen in names like Zoom video communication Inc (NASDAQ 🙂 or Okta (NASDAQ :). Smartsheet (NYSE:) (Tuesday) and Coupa software company (NASDAQ 🙂 (Monday) is also among the software companies reporting this week.
JM Smucker Corporation (NYSE:) and Campbell’s soup (NYSE:) Both are reports this week and may provide some insight into the impact of inflation on core consumer goods. Along the same lines, General Casey Stores (NASDAQ:), Five Below (NASDAQ:), and Signet Jewelers Ltd (NYSE:) are all reporting from the retail sector, giving another round of input on consumer spending and appetite.
Nio (NYSE) reported earnings Thursday, as the Chinese electric car maker neared 52-week lows as China’s coronavirus-related shutdowns do.
Check out our full earnings calendar here.
5. Any other companies shoes to drop?
The past week has been marked by a number of comments and corporate announcements from big names, including economist Jamie Dimon, email from Elon Musk discussing Tesla’s workforce, and Coinbase (NASDAQ 🙂 announcing and canceling some accepted job offers. With several investor conferences this week, there will be plenty of opportunity for CEOs from across the economy to influence whether the economy is teetering on the edge of a cliff, Dimon argued, or whether, as the former Goldman Sachs (NYSE) CEO said: , Lloyd Blankfein argued, “We may have landed softly.”
Contrasting any other layoff news on the one hand and M&A news, like Friday’s Bristol-Myers (NYSE:) Squibb, on the other hand, will also provide a mill for the investor’s factory.
It’s not the easiest market to navigate in, but then again, when is it at all?
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