Stock Market - The Week Ahead

US Nonfarm Payrolls

The highly anticipated nonfarm payrolls data on Friday is predicted to demonstrate that the American labour market was robust once more in May. The economy is predicted by economists to have added 185,000 jobs, a little increase over the previous month.

Investors had been concerned that the US Federal Reserve would not be able to decrease rates this year at all or might possibly need to raise rates due to an extremely robust economy. However, statistics this month indicating a cooling employment market and falling inflation calmed such worries, if only momentarily.

Nevertheless, officials have asked for patience when it comes to reducing interest rates, stating that they need to see statistics from many months to be certain that inflation is returning to its 2% objective. If the employment report demonstrates that the slowdown in job creation has persisted, it may demonstrate that the economy is faltering.

European Central Bank Interest Rate Decision

On Thursday, the ECB is almost set to become the first significant central bank to lower interest rates in this cycle.

With a 25 basis point rate decrease virtually assured by lawmakers, market observers will be listening to ECB President Christine Lagarde's remarks regarding the bank's future plans.

While the economy of the EU is rebounding quicker than anticipated and its strong services sector continues to have sticky inflation, the carefully monitored wage growth number surged last quarter, casting doubt on the group's prospects beyond June.

Although expectations on future movements have decreased, markets are still anticipating the ECB to lower rates more than once this year in comparison to the Fed and the Bank of England.

Compared to three at the last ECB meeting and at least five at the beginning of the year, they now anticipate two cuts and less than a 50% likelihood of a third.

Bank of Canada

Following statistics released on Friday that revealed the nation's economy grew at a slower rate than anticipated in the first quarter, the Bank of Canada is generally expected to announce a 25 basis point rate drop at its forthcoming meeting on Wednesday.

The GDP report may persuade the central bank to begin reducing borrowing costs because it showed that Canada's economy did not recover from a bad patch last year as strongly as statistics originally suggested.

US Markets – Wall Street

Even though all three of the main U.S. market indexes had losses last week, they nonetheless finished the month with gains: the Dow increased by 2.4%, the S&P 500 increased by around 4.8%, and the Nasdaq increased by 6.9%.

Even if the main U.S. stock indexes have had an incredible year, there is still pain in one economically sensitive area of the market.

The Dow Jones Transportation Average has dropped roughly 5% so far this year. Some investors have expressed concern that the 20-stock transport index, which comprises trucking companies, airlines, railway operators, and package shipping companies, may be a sign of economic weakness or that the market as a whole may not be able to make significant gains unless they rebound.

Crude Oil – OPEC

According to Reuters, OPEC+ will probably decide on Sunday to extend its severe oil output cuts beyond 2024 and maybe 2025. This is because the organisation is trying to support the market in the face of slowing global demand growth, high interest rates, and increasing competitor U.S. production.

The price of an oil barrel is currently at $80, which is less than what many OPEC+ countries require to balance their budgets. Oil market experts anticipate OPEC+ to continue cuts to balance supply as concerns about the sluggish growth of demand in China, the world's largest oil importer, have put pressure on prices.

Since late 2022, OPEC+—the Organisation of the Petroleum Exporting Countries and its allies led by Russia—has implemented a number of significant output reductions.

Members of OPEC+ are now reducing their output by 5.86 million barrels per day (bpd), or around 5.7% of the world market.