Top 5 Things to Watch for in the Markets This Week Author: Investing.com

Investing.com — Friday’s U.S. jobs report will be the highlight of what will be a holiday-shortened week as markets seek clarity on exactly when interest rate cuts might begin. Comments from Federal Reserve Chairman Jerome Powell will be closely watched, as will Wednesday’s minutes from the U.S. central bank’s latest meeting. Elections in France and the U.K. will also keep markets on high alert. Here’s a look at what’s happening in the coming week.

1. US employment data

Investors will be focusing on Friday’s nonfarm payroll report for new clues about when the Federal Reserve might start cutting interest rates.

Economists expect the U.S. economy to add more jobs in June after a larger-than-expected gain of 272,000 the previous month, underscoring the resilience of the labor market.

The Federal Reserve kept interest rates on hold earlier this month, with rate cuts likely until December as officials look for more compelling signs that inflation is returning to the central bank’s target or evidence that the labor market is cooling.

Ahead of the release of nonfarm payroll data, a report on Tuesday is expected to show another decline in employment in May, indicating that companies are having more success filling positions.

2. Powell, Lagarde comments; Federal Reserve minutes

Federal Reserve Chairman Jerome Powell is scheduled to appear Tuesday at the European Central Bank’s annual forum in Sintra, Portugal.

Powell and ECB President Christine Lagarde will take part in a panel discussion on “monetary policy in an era of transformation” with investors seeking new information on the future of interest rates.

Inflation is declining after a sharp rise in the first quarter but remains above the Fed’s 2% target.

Meanwhile, Wednesday’s June Fed meeting will be analyzed in terms of the central bank’s opinion on the economic outlook and factors influencing the prospects for monetary policy.

3. Elections in France, Great Britain

France goes to the polls on Sunday in the first round of early elections that have rocked markets.

Investors will be watching for clues about the results of the second round of trading a week later. But uncertainty could prevail in a 577-county district race in which candidates need just 12.5% ​​of the vote to advance to the runoff, which also includes three-way races.

Meanwhile, polls predict a landslide victory for the opposition Labor Party in the UK elections on Thursday. Support for the party will reach levels not seen since the Brexit vote in 2016.

Traders see a return to stability after heavy political turmoil during 14 years of Conservative rule and speculate that Labour leader Keir Starmer could rebuild trading links with Europe.

But it remains to be seen how large a majority Starmer will be able to command in parliament.

4. Inflation in the Eurozone

The euro zone will publish June data on Tuesday, following Germany’s report on Monday, with economists expecting a slight slowdown in both headline and core indicators after rising in May.

On Thursday, the ECB will publish the results of its June meeting, where it cut interest rates for the first time since September 2019.

Although the ECB started raising interest rates later, the June cut allowed it to outpace the Fed in cutting rates as the world’s largest central bank continues to grapple with above-target inflation.

5. China PMI

Official data on Sunday showed manufacturing activity in China fell for a second month in June, while activity in services fell to a five-month low, maintaining calls for more stimulus as the world’s second-largest economy struggles to gain momentum. .

The Caixin manufacturing PMI, due on Monday, is expected to decline.

Analysts expect China to implement more policy support measures in the short term, and the government’s promise to increase fiscal stimulus will likely help boost domestic consumption more quickly.

–Reuters reported