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Weekly Market Preview
Friday, Apr 26, 2024
US growth levels dipped in the first quarter of this year, coming in lower than expected at 1.6%, signalling a slowdown in the momentum of rapid growth seen in the gross domestic product over the past year. Additionally, inflation levels in the current year moved contrary to the desired direction by US monetary policymakers, driven by an increase in the services sector inflation, particularly the health and financial services sectors. This led Federal Reserve members to dismiss the likelihood of imminent interest rate cuts, causing bond yields to rise to their highest levels in several months, while major stock indices such as the SP500 fell to multi-week lows.
This week, investors expect a series of influential economic data releases, such as the Eurozone Consumer Price Index for April, which directly impacts the monetary policy of the European Central Bank. Expectations suggest that the YoY inflation levels may stabilize on at 2.4%, potentially paving the way for the ECB to consider reducing interest rates by 25 basis points at the upcoming June meeting.
In the US, members of the Federal Open Market Committee are expected to maintain current interest rates unchanged in their meeting this week. Investors will closely monitor the subsequent press conference by the Fed Chairman for clues regarding the possible timeline for the start of any interest rate cuts this year.
Towards the end of the week, the markets are also anticipating the US jobs report, expected to unveil the addition of 245,000 jobs in April, with unemployment levels projected to stabilize at 3.8%. In the first three months of the year, the American economy witnessed a significant and higher-than-anticipated surge in job numbers. However, the Chairman of the Federal Reserve noted that growth levels could increase without a corresponding rise in inflation due to the increased availability of immigrant labour, mitigating the necessity for businesses to raise wages to attract workers.
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