Top 5 Things to Watch in Markets in the Week Ahead -Breaking
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Noreen Burkhart
Investing.com — In the coming week, market sentiment will be driven by worries about tensions in Russia and Ukraine as well uncertainty regarding the Federal Reserve’s willingness to increase interest rates aggressively. Wednesday’s Fed minutes may provide a sense of how quickly policymakers want to move, while appearances by several Fed officials will also be parsed for clues. U.S. data Calendar features January prices figures. These will be closely viewed after last week’s data showing that they reached their highest level in over 40 years. The earnings season is over, though not without a few reports. The U.K. will release economic data which should keep the Bank of England in line for further rate increases. Here’s what you need to know to start your week.
- Geopolitical tensions
Wall Street’s three main indexes closed sharply lower on Friday after the White House warned that a could begin any day. Stocks were hit but Treasuries and safe-haven assets like the rose, despite this.
The prospect of Russia sanctions, which would be a significant producer, adding to worries about already tight supplies, also caused prices to soar.
Analysts believe that rising prices will increase inflation and put pressure on the Fed, which could lead to a more aggressive rate hike.
“By pushing energy prices even higher, a Russian invasion would likely exacerbate inflation and redouble pressure on the Fed to raise interest rates,” said Bill Adams, Chief Economist for Comerica Bank, in a note cited by Reuters.
“From the Fed’s perspective, the inflationary effects of a Russian invasion and higher energy prices would likely outweigh the shock’s negative implications for global growth,” he said.
- Fed minutes and speakers
With markets already pricing in a strong chance the Fed will hike rates by half a percentage point at its upcoming March meeting, Wednesday’s from the Fed’s January meeting, will be scrutinized for any indications on how big a move officials are contemplating.
Last month Fed Chair Jerome Powell flagged a March lift-off and said there was “quite a bit of room” to raise interest rates without threatening the recovery in the labor market.
Goldman Sachs announced Friday it expected a quarter-point rate rise this year. Its previous forecast was five.
This week, several Fed officials will be making appearances that will also attract attention. St. Louis Fed’s and Cleveland Fed President Loretta are to speak on Thursday. Fed Governor Lael will be speaking on Friday, along with New York Fed President John and Fed Governor Christopher of New York, and Chicago Fed president Charles
Bullard indicated last Thursday, in light of the CPI data that he is now requesting a number of interest rate increases over the three Fed meetings.
- U.S. economic data
Markets will get an additional update on the inflation picture with Tuesday’s release of figures, which are expected to remain elevated.
Soaring inflation has seen so Wednesday’s data on retail sales will also be in focus this week. The expected rise in retail sales last month is due to the higher sales of autos.
Reports on the economic calendar include,……
- Earnings
The earnings season is coming to an end, but there will be a lot of activity this week. Airbnb Inc (NASDAQ:) reports on Tuesday, followed by semiconductor giant NVIDIA (NASDAQ:) and Cisco Systems (NASDAQ:), which are both due to report after the close of trade on Wednesday.
Walmart (NYSE:), a retailer known for their low everyday prices, announced Thursday that it is well placed to weather rising inflation. Pandemic caused inflation in the entire supply chain, including labor and raw materials. Companies were forced to charge more to consumers as a result. Many companies were unable to fully compensate for the effects and suffered a loss in profits.
Deere (NYSE:), the world’s largest maker of farm equipment reports Friday.
- U.K. Data
It’s a packed week on the U.K. economic calendar with the latest figures out Tuesday, data on Wednesday and on Friday.
In the face of rising inflation, the Bank of England just announced its first back-toback rate increases since 2004. It expects that it will reach 7%. The markets are pricing another 130 basis point in rate increases before the year ends.
The jobs report is expected to show the unemployment rate unchanged from last month’s reading of 4.1% while the annual rate of inflation is expected to hold steady at 5.4%.
Retail sales are expected to rebound from December’s 3.7% slump, but inflation, rising energy bills, higher rates and tax hikes will all weigh on the outlook.
–This report was made possible by Reuters
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