© Reuters
Investing.com – Coming next week is the US monthly jobs report, which is a very important report given that it comes as stock markets enter the second quarter, OPEC is also scheduled to meet next week, and the central banks of Australia and New Zealand are announcing their latest decisions on interest rates.
Market watchers await Friday’s non-farm payrolls report for the latest update on the health of the labor market, which has remained strong over the past year in the face of a barrage of interest rate hikes by NASDAQ.
Economists expect the US economy to have added 238,000 jobs in March after an increase of 311,000 in February. Average hourly earnings are expected to increase at a rate of 4.3% year-on-year, which is the slowest rate of increase since July 2021.
The March employment report will be the last before the next Federal Reserve meeting in May, and it comes amid investor divisions over whether policymakers will raise interest rates for the last time. An increase in jobs of more than 200,000 is likely to boost expectations of a 25 basis point rate hike.
Federal Reserve officials have indicated that they expect interest rates to remain near current levels for the rest of this year to help combat inflation.
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Other data, Fed officials talk
Ahead of Friday’s important March jobs report, the economic calendar also includes the February job vacancies report on Tuesday and March data on private sector employment on Wednesday.
ISM Purchasing Managers’ Surveys of manufacturing and services sector activity are scheduled to be released on Monday and Wednesday, respectively.
Several Fed policymakers are scheduled to appear during the week, including Cleveland Fed Chair Loretta Mester, St. Louis Fed Chair James Bullard, and Fed Governor Lisa Cook.
Fed officials have indicated that they expect interest rates to remain near current levels for the rest of this year to help bring inflation back to the bank’s target of 2%. But since inflationary pressures remain high, officials will have to weigh the impact of higher interest rates on financial stability, especially after the recent turmoil in the banking sector.
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stock markets
US stock markets posted strong gains in the first quarter despite a sell-off in bank stocks, after the collapse of two regional banks raised fears of a broader financial crisis.
It rose 16.8%, the largest quarterly increase since 2020. It rose 7%, rebounding from a drop to nearly 20% in 2022, and ended the quarter up 0.4%.
Cautious investors say the gains make stocks more vulnerable to the effects of an economic recession, which may have drawn closer due to turmoil in the banking sector.
How much stocks factored in a potential recession — and whether the economy would go into recession — has been a point of debate on Wall Street.
Hans Olsen, chief investment officer at Videoshare Trust, which hedges against future market turmoil by holding higher than usual amounts of cash, answers: “The answer is absolutely no, the market hasn’t priced in a recession at all.” As for stocks, he added: “This means that we may face some very bad surprises in the coming fiscal quarters.”
Reuters reports that OPEC+ is likely to stick to its existing agreement to cut oil production at a meeting on Monday, after recovering from a 15-month low.
Oil has recovered towards $80 a barrel for crude after dropping to nearly $70 on March 20, as concerns about a global banking crisis receded, and exports from the Kurdistan region of Iraq halted, limiting supplies.
OPEC+, which includes the Organization of the Petroleum Exporting Countries and a group of allies led by Russia, is scheduled to hold a virtual meeting of the Ministerial Follow-up Committee that includes Russia and Saudi Arabia on Monday.
After those talks, the next enlarged meeting of OPEC+ will take place no earlier than June.
Low oil prices are a problem for most of the OPEC+ members because their economies are highly dependent on oil revenues.
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(RBA) and Reserve Bank of New Zealand (RBNZ)
The Reserve Bank of Australia is due to meet on Tuesday to decide whether to raise interest rates or keep them unchanged.
Last week’s data showed that Australian inflation slowed to an eight-month low of 6.8% y/y in February, prompting investors to discount chances of a 25bp rate hike.
RBA Governor Philip Lowe said the central bank was closer to pausing its rate increases because monetary policy is now in constraining territory, and suggested stopping as soon as possible in April depending on the data.
Meanwhile, the markets are still betting on a 25 basis point rate hike by the Reserve Bank of New Zealand when it meets on Wednesday.
–Reuters contributed to this report
