Stock Market - The Week Ahead

Nonfarm Payrolls

The nonfarm payrolls data on Friday is expected to get a lot of attention from investors who are searching for new clues about when the Federal Reserve may begin to lower interest rates.

It is anticipated by economists that the U.S. economy added 189,000 jobs in June, following a stronger-than-expected increase of 272,000 jobs in May that demonstrated the labour market's tenacity.

In an effort to find more evidence that inflation is returning to the central bank's target range or that the labour market is cooling, the Fed decided to postpone the beginning of rate reductions until maybe December this month.

Tuesday's report, which comes before the nonfarm payrolls data, is predicted to reveal that job vacancies decreased once more in May, suggesting that employers are finding it easier to fill positions.

FED Minutes

On Tuesday, Fed Chair Jerome Powell will speak at the annual forum of the European Central Bank in Sintra, Portugal.

Powell will take part in a panel discussion on "monetary policy in an era of transition" alongside Christine Lagarde, the president of the European Central Bank. Investors are watching for any new information regarding interest rate movements in the future.

Although it still exceeds the Federal Reserve's 2% objective, inflation is decreasing after peaking in the first quarter.

In the meanwhile, the Fed's assessment of the economic outlook and the variables impacting the monetary policy outlook will be analysed in the minutes of its June meeting, which were released on Wednesday.

Eurozone Inflation

Following Germany's report on Monday, the Eurozone is scheduled to announce its June inflation statistics on Tuesday. Economists anticipate a minor deceleration in both the headline and underlying measures subsequent to a May increase.

The minutes of the June meeting, during which the ECB lowered interest rates for the first time since September 2019, will be made public on Thursday.

The world's largest central bank is still being held back by above-target inflation, but even though the ECB started raising interest rates later, the June decrease put it ahead of the Fed on its march lower.

Elections

Sunday marks the first round of France's unexpected early election, which has caused market volatility.

A week later, investors will be on the lookout for any clues regarding the outcomes of the second round. However, uncertainty may reign in a campaign involving 577 constituencies, where contenders just need to receive 12.5% of the vote to advance to the second round, which also includes three-way contests.

In the meantime, surveys indicate that the opposition Labour Party will win the British election handily on Thursday, returning the value of the pound to levels not seen since the Brexit referendum in 2016.

Following a period of intense political unrest during the 14-year Conservative administration, traders have seen a return to calm and have conjectured that Labour leader Keir Starmer may be able to restore economic ties with Europe.

However, it's unclear how big of a majority Starmer can gather in Parliament.

(Sources: investing.com, reuters.com)