Key Factors
Key Factors for The week Ahead highlights.: JOLTS reports, BoE rate decision, as well as the major earnings
The Federal Reserve and the European Central Bank are both expected to announce rate increases this week, but the Bank of Japan is expected to hold the line. This week will be dominated by central bank meetings. The U.S. stock market surge is nearing a turning point, and oil prices are expected to rise further despite worries about the supply outlook.
Key factors for the wall street week Ahead
Nonfarm payrolls
In July, the U.S. economy added 184,000 jobs, the unemployment rate fell to 3.6%, and average hourly earnings cooled.
The labour market’s resiliency has shaped the belief that the economy is going toward a gentle landing of decreasing inflation and good growth.
Last week, Fed Chair Jerome Powell said the central bank’s staff no longer expects a U.S. recession and that inflation could return to its 2% objective without high job losses, boosting investor confidence.
Last Wednesday, the Fed boosted rates 25 basis points to their highest level since 2007 and said it would follow economic data for future rate hikes.
The Fed may need to raise rates to control inflation if the economy grows too fast. A sharp job loss could revive recession fears.
BoE rate decision
Markets are divided over whether the BOE will raise rates by 25 basis points after a 50-bps boost in June at its Thursday rate setting meeting.
Since February, inflation hasn’t risen, and price pressures are easing.
Inflation, at 7.9% in June, is the highest among major nations and well above the BOE’s 2% target, so markets shouldn’t rule out a 50-bps move, especially if policymakers think they may need to hike again in September.
Investors accused the BOE of being behind the curve when inflation rose higher than projected despite 13 consecutive rate hikes since December 2021, which raised the risk of a recession.
Earnings
Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) will disclose earnings Thursday after the market closes.
Some investors worry that a tech market rise fuelled by artificial intelligence breakthroughs may fizzle. The Nasdaq 100 is up 44% year-to-date, while the S&P 500 information technology sector is up 46%.
Last week’s optimistic Meta Platforms and Alphabet (NASDAQ:GOOGL) results supported mega cap values.
According to Refinitiv statistics, published by Reuters, more than half of S&P 500 companies had reported second quarter earnings by Friday, with 78.7% exceeding analyst estimates.
Eurozone data
On Monday, the Eurozone will report a preliminary estimate of July inflation and second quarter GDP, which will be widely followed amid debate about whether the European Central Bank will hike interest rates in September.
The bloc’s GDP is predicted to show an increase in the second quarter, although inflation is expected to moderate marginally.
At 5.5%, euro zone inflation is still beyond the ECB’s 2% objective, although halving since October.
On Thursday, the ECB hiked its deposit rate to a record high but removed a clear hint at additional hikes from its policy statement, suggesting another increase at its September meeting is unlikely.
Even while the ECB wanted to “break the back” of inflation, Christine Lagarde warned the future was uncertain.
China PMIs
China’s PMI figures at the start of the week are likely to show a fourth straight month of manufacturing activity decline in July, highlighting the need for intervention to assist the post-pandemic recovery in the world’s second largest economy.
On Monday, the official manufacturing and services PMIs will be revealed. On Tuesday, Caixin will announce its SME manufacturing PMI.
Industrial profits fell double-digits for a sixth month on Thursday.
China’s economy grew slowly in the second quarter as demand deteriorated at home and abroad, but most analysts expect policymakers to avoid excessive intervention due to debt problems.
Labor Market Updates
On Tuesday, the Labor Department will release the June JOLTS report, which tracks job vacancies, hiring, quits, and separations. As availability cooled, job openings fell to 9.5 million last month from 9.82 million in May. ADP will release its National Employment Report on Wednesday, monitoring private sector payroll growth. After a nearly half-million-job boost in June, July payrolls are expected to rise 210,000. This might set up Friday’s July nonfarm payrolls data. This month, economists expect 184,000 job gains, down from 209,000 in June. The Fed’s rate hikes are finally chilling the labor market. 3.6%, a 50-year low, is the anticipated unemployment rate.
USA Economic calendar for week
USA Events Calendar:
Monday, July 31
Chicago Purchasing Managers’ Index (PMI)
Dallas Fed Manufacturing Index (Jul)
Euro Area Inflation Rate – Flash Estimate (Jul)
Euro Area GDP Growth Rate – Flash Estimate (Q2 2023)
Tuesday, August 1
S&P Global Manufacturing PMI – Final Reading (Jul)
ISM Manufacturing PMI (Jul)
Construction Spending (Jun)
Job Openings and Labor Turnover Survey (JOLTS) Report (Jun)
Wednesday, August 2
ADP National Employment Report (Jul)
Vehicle Sales (Jul)
Thursday, August 3
Challenger, Grey and Christmas Job Cuts (Jul)
S&P Global Composite PMI – Final Reading (Jul)
ISM Services PMI (Jul)
Factory Orders (Jun)
Bank of England Policy Meeting and Interest Rate Decision
Friday, August 4
U.S. Nonfarm Payrolls Report (Jul)
Global Economic calendar for week
Monday
Euro area
Q2CY23 GDP Growth Rate Flash
Japan
Retail Sales, Housing Starts, Construction Order (Jun); Consumer Confidence (Jul)
U.K.
Nationwide Housing Prices (Jul)
Tuesday
USA
S&P Global Manufacturing PMI Final, ISM Manufacturing new order (July); JOLT’s Job opening & quits, Construction Spending (Jun)
Euro area
HCOB Manufacturing PMI final(Jul); Unemployment Rate (Jun)
Japan
Unemployment Rate, Jobs/Applications ratio (Jun) ; jibun Bank Manufacturing PMI Final (Jul)
China
Caixin Manufacturing PMI (Jul)
U.K.
S&P Global/CIPS Manufacturing PMI Final (July);
Wednesday
USA
API & EIA Crude Oil Stock Change, MBA Mortgage Applications (For week ended Jul28); Total Vehicle Sales (Jul)
Japan
BOJ Monetary policy Meeting Minutes
Thursday
USA
Initial Jobless claims (for week ended Jul29), S&P Global Services & Composite PMI Final (Jul); Factory Order (Jun)
Euro area
HCOB Services & composite PMI Final (Jul), PPI (Jun)
Japan
Jibun Bank Services & Composite PMI Final (Jul)
China
Ciaxin Services & Composite PMI (Jul)
U.K.
S&P Global/CIPS services and composite PMI Final (July); BoE interest rate Decision; MPC Meeting Minutes
Friday
USA
Unemployment Rate, Non Farm Payrolls (Jul)
U.K.
New Car sales, S&P Global/CIPS Construction PMI (Jul)
EARNINGS CALENDAR
MONDAY JULY 24
Cadence Design Systems Inc. (CDNS), NXP Semiconductors (NXPI), Ryanair Holdings (RYAAY), Brown & Brown Inc. (BRO), Domino’s Pizza (DPZ), and Crown Holdings Inc. (CCK)
TUESDAY JULY 25
Microsoft (MSFT), Alphabet Inc. (GOOGL; GOOG), Visa (V), Texas Instruments (TXN), Raytheon Technologies (RTX), Verizon Communications (VZ), General Electric (GE), UBS (UBS), 3M Company (MMM), and Ford Motor Company (F)
WEDNESDAY JULY 26
Meta Platforms (META), The Coca-Cola Company (KO), Thermo Fisher Scientific (TMO), Union Pacific Railroad (UNP), Boeing (BA), Automatic Data Processing Inc. (ADP), AT&T (T), Chipotle Mexican Grill (CMG), Stellantis (STLA), and O’Reilly Automotive (ORLY)
THURSDAY JULY 27
Mastercard (MA), AbbVie (ABBV), McDonald’s (MCD), Shell (SHEL), Linde (LIN), Comcast (CMCSA), T-Mobile (TMUS), Intel (INTC), Honeywell International (HON), and S&P Global Inc. (SPGI)
Friday, July 28
ExxonMobil (XOM), Procter & Gamble (PG), Chevron (CVX), AstraZeneca (AZN), Sanofi (SNY), Aon (AON), Colgate-Palmolive (CL), Charter Communications (CHTR), Centene Corp. (CNC), and T-Rowe Price Group (TROW)
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