Key events to monitor in the week ahead

PCE Friday

The personal consumption expenditures price index, the preferred inflation indicator of the Fed, is scheduled for release on Friday. It is expected to provide insight into whether the recent inflation decrease is holding up.

However, recent PCE data have fallen short of forecasts. According to the most recent estimate, U.S. inflation surprisingly followed a sideways path in April.

The argument that rate cuts are imminent might be weakened by another reading of this kind. The markets are still hoping for two rate cuts this year, in contrast to the Fed.

The June consumer confidence data and the May statistics on both existing and new house sales are also included in the economic calendar. Together with information on durable goods orders for May, there is also a third estimate of the first-quarter GDP growth.

AI Rally

A lot of investors think that tech equities have a good long-term outlook because of their high profitability and enthusiasm about the transformational potential of AI. However, significant price increases, such as Nvidia's 155% year-to-date run, have raised concerns that the tech boom may be reaching its limit.

Small caps and so-called value companies, such as financials and industrials, may be attractive investments for investors who want to buy market laggards.

Even then, there aren't many indications that investors would stay away from tech and growth companies for very long. Over the past ten years, it has been unprofitable to wager against technology, since the Russell 1000 Value has increased by around 70% while the Nasdaq 100 index has increased by more than 400%.

Eurozone

France, Italy, and Spain are set to disclose preliminary June inflation figures on Friday inside the eurozone.

The data will be crucial for speculators attempting to determine how many rate cuts the European Central Bank will make this year as it will set the tone for a print that covers the whole euro zone the following week.

The European Central Bank (ECB) lowered interest rates on June 6, but it is unclear how many more would be implemented given the country's persistently high salaries and inflation.

By the end of the year, traders anticipate one more reduction and a roughly 64% likelihood of a second, down from over 80% prior to the June meeting.

Conflicts over trade

The European Union and China have decided to begin negotiations on the proposed tariffs that will be applied to electric cars (EVs) that are manufactured in China and imported into the European market.

Brussels suggested high tariffs earlier this month to counter what the EU views as exorbitant subsidies. On imported Chinese EVs, the EU will impose temporary charges of up to 38.1% by July 4. The full duties will take effect in November.

The declaration made by the European Commission on June 12th, which creates a new front in the West's trade battle with Beijing, comes after the US raised tariffs on Chinese autos in May.

(Sources: investing.com, reuters.com)