Last week, global financial markets saw a variety of movements, with US equity markets climbing thanks to strong earnings from tech giants like Tesla, Microsoft, and Alphabet.
These gains helped offset concerns from the US’s lower-than-expected GDP growth for the first quarter of 2024 and higher inflation figures.
In contrast, Australia’s ASX 200 faced challenges, particularly influenced by a drop in BHP’s shares following its failed acquisition bid for Anglo American.
The US Durable Goods Orders showed a promising increase of 2.6% in March, exceeding analyst expectations. However, the US GDP growth did not meet the anticipated 2.5%, recording only a 1.6% increase quarter-over-quarter.
In Europe, the Eurozone Composite Flash PMI demonstrated its fastest growth in eleven months, reaching 51.4. Meanwhile, Australia’s inflation cooled to 3.6% year-over-year in the first quarter, though this was still above what many had forecasted.
This upcoming week holds several key economic events:
Insights into China’s manufacturing sector will be updated with the release of the NBS and Caixin Manufacturing PMIs. Additionally, first-quarter GDP data from Germany and the broader Eurozone will help gauge the pace of economic recovery in these regions.
The China NBS and Caixin Manufacturing PMIs are closely monitored as indicators of the economic health of China’s manufacturing sector, which plays a crucial role in the global economy.
A positive reading can boost investor confidence in China’s market stability and growth prospects, potentially lifting global markets, especially in sectors reliant on manufacturing and exports.
Conversely, a contraction can raise concerns about slowing economic growth in China, affecting commodity prices and global supply chains. The Caixin PMI, in particular, is noted for its sensitivity to market risk sentiment.
New Zealand’s unemployment rate will shed light on the economic conditions in the region. In the US, the ADP Employment report and Consumer Confidence Index are expected to provide vital information about the labor market and consumer sentiment.
The US will release its ISM Manufacturing PMI and JOLTS Job Openings, offering further clarity on the manufacturing sector and job market. The Federal Open Market Committee (FOMC) will also announce its decision on interest rates, which is likely to remain unchanged due to ongoing inflation concerns.
An unexpected rate hike could strengthen the USD and lead to a drop in stock prices, whereas signals of future rate cuts could do the opposite.
The US Non-Farm Payrolls will be closely watched as an essential indicator of the country’s economic health and could impact the Federal Reserve’s policy decisions in the coming months.
Strong job growth will suggest a robust economic environment, potentially leading the Fed to consider tightening monetary policy, which could bolster the USD and impact bond yields.
Conversely, weak job growth might raise concerns about economic stagnation, possibly leading to lower Treasury yields and a weaker dollar.
The week will conclude with the US ISM Services PMI, providing a snapshot of the service sector’s status, which dominates the US economy.
As with key events like these, this week’s economic events are likely to cause market fluctuations. Traders should pay close attention to the releases and central bank activities, as these could sway market expectations regarding future monetary policies, especially in the US.
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