5 Top Subjects to Watch in the Markets This Week By Investing.com


© Reuters

By Noreen Burke

Investing.com — The European Central Bank will hold its annual retreat in Portugal, during which its President, Christine Lagarde, will participate in a debate along with the President of the , Jerome Powell, and the Governor of the Bank of England, on Wednesday . The first half of what has been an exceptionally turbulent year for markets is winding down, with investors wondering whether the next six months will bring some respite or more volatility. The economic calendar includes the personal consumption expenditures (PDD) price index – a gauge of inflation monitored by the Fed – in addition to the latest inflation data from the euro zone and Chinese PMIs.

Here’s what you need to know to start your week.

  1. Sintra Forum

The ECB’s three-day forum in Sintra, Portugal, kicks off on Monday, against a backdrop of doubts over whether the central bank’s move to end the biggest rise in inflation in decades could throw the global economy into recession.

The forum will focus on “monetary policy challenges in a rapidly changing world”.

Investors will closely follow Wednesday’s debate with Lagarde, Powell and Bailey, looking for signs of how central bankers see the balance between containing inflation and trying to ensure a soft landing for the economy. global.

ECB officials’ comments will also be closely followed for more details on the plans for the anti-fragmentation instrument.

Check out the economic calendar for this week.

  1. Torrid first semester ends

Six months characterized by the biggest cycle of interest rate hikes in decades, market turmoil and a war that set off the inflation spiral are drawing to a close, leaving investors wondering what the second half of the year holds.

The year-to-date decline of about 18%, and bonds performed slightly better: The US bond market, as measured by the Vanguard Total Bond Market Index Fund (NASDAQ:), is down 10.8% in the year.

With investor expectations teetering between continued high inflation and an economic downturn caused by the Fed’s aggressiveness, few believe that market volatility will soon disappear.

“Inflation is still rising and that means the Fed is going to make higher and higher hikes, which will put downward pressure on the economy, so that’s what’s fueling fears of a recession,” Seema Shah, chief strategist at Principal Global Investors told Reuters.

“There are also increasing signs of economic fragility coming sooner than expected.”

  1. US economic data

The US will release a series of economic data next week, which will highlight the economy’s performance amid the Fed’s aggressive rate hike cycle.

Investors will be focused on the release, on Thursday, of May data for the , looking for signs of a possible slowdown in inflation.

Economists expect a slowdown in prices, further deterioration in prices and more fragility in markets, contributing to concerns about the economic outlook.

A report on the and the should evidence the size of the impact of the increase in mortgage rates on the housing sector.

Several Fed officials are also expected to make appearances throughout the week, including New York Fed President John, San Francisco Fed President Mary Daly, Cleveland Fed President Loretta, and St. Louis, James.

Last Friday, Daly – in general, dovish on monetary policy – indicated an increase of 0.75 percentage point during the next Fed meeting in July.

Stay on top of European market movements.

  1. eurozone inflation

The euro zone is due to release data on June consumer price inflation on Friday, which is expected to hit a new year-on-year record as energy and food price readjustments continue.

Inflation in the euro zone hit a record 8.1% in May, more than four times the ECB’s target of 2% a year.

The inflation data is likely to further heat the debate over whether or not the ECB should raise interest rates further after the 25 percentage point hike scheduled for July, in a move that will represent its first step towards tightening. of monetary policy in more than a decade.

The data on national inflation in and around the country will be released on Wednesday.

However, Eurozone data on the same day is likely to remain depressed, against a backdrop of recurring concerns about the economic impact of rising inflation and the war in Ukraine.

A little further east, China is expected to release data on industrial earnings on Monday, followed by PMI data in and in , respectively.

Positive numbers may bring some hope to depressed financial markets.

The Covid zero lockdowns and the slowing global economy forced the price of , a barometer of growth, to drop nearly 10% in two weeks in Shanghai.

But the lockdowns have been eased, and if the data points to a return to growth, it would be a welcome sign for the economy and for those who regard Chinese stocks as a safe haven from stagflation fears that have gripped the West.

Check Brazilian stock quotes

  1. Next chapters from Petrobras (SA:)

The Petrobras Eligibility Committee (Celeg) approved the curriculum of Caio Paes de Andrade so that he can take over as Board Member and President of the state-owned company on Friday, 24th. The company’s Board of Directors should meet this Monday, 27th, to continue with the necessary procedures for Andrade to become the company’s CEO.

The approval of Andrade by Celeg, however, did not receive the favorable vote of the Committee’s president, Francisco Petros. When voting against his acceptance, Petros said that Andrade’s approval should only take place at a shareholders’ meeting, since the candidate does not have proven experience in the oil and gas sector.

However, Petros, as well as the other directors who voted for the approval of Andrade, Luiz Henrique Caroli, Ana Silvia Corso Matte and Tales José Bertozzo Bronzato, understood that there is no legal obligation for the president of Petrobras to have experience in the sector, even if be preferable.

The market is closely following the change in command of Petrobras, in the face of increasingly frequent attacks by President Jair Bolsonaro and his allies on the company’s pricing policy. The rise in fuel prices worries Bolsonaro’s re-election plans, as well as persistent inflation that also weighs on the pockets of the disaffected population.

This week should also bring more news about the government’s plan to increase Auxílio Brasil to R$600 and to create a R$1,000 voucher for truck drivers, both of which are part of Bolsonaro’s project to improve his image with him. to the electorate.

Meanwhile, in the economic calendar, data from Caged should be released this Thursday, 31, with the expectation of net creation of 187,500 new jobs.

— Reuters contributed to this article