Week Ahead

The war in Ukraine will again continue to weigh on the markets next week with any breakthrough on ceasefire unlikely to happen any time soon. Investors also will closely follow US payrolls report and personal consumption expenditures data for any clues on how fast the Fed will tighten the monetary policy.

It will be a busy week in the US, with all eyes on the March payrolls report and personal consumption expenditures data. Markets expect a 475K employment gain and a 3.7% rate of unemployment, in another sign of a tight labour market and strengthening the case for the Fed to deliver a 50bps rate hike in May. Also, personal income and spending are expected to rise moderately while the annual core PCE inflation, Fed’s preferred measure, may hit 5.5%, the highest in 40 years. Other important releases include: the ISM Manufacturing PMI, goods trade balance, S&P/Case-Shiller and FHFA house price indexes, JOLTS figures, CB consumer confidence, corporate profits, final GDP growth estimates for Q4, and the ADP employment.

Elsewhere in America, manufacturing PMIs for Canada, Brazil and Mexico will be in the spotlight, alongside monthly GDP for Canada; PPI, industrial production, unemployment and trade balance for Brazil; Mexico unemployment figures and Chile interest rate decision.

In Europe, key inflation reports will be released for the Eurozone, including those for Germany, France, Italy and Spain. In the Euro Area, the headline HICP rate is expected to surge again in March, reaching a new all-time high of 6.5% year-on-year compared to 5.9% in February. Investors will also keep an eye on the Euro Area business survey; Germany Gfk consumer confidence, jobless data, retail sales and import prices; Russia fourth-quarter GDP numbers; Switzerland KOF economic barometer, retail trade and consumer prices; and Turkey foreign trade. Also, the Eurozone, Germany and France will publish their final estimates of S&P Global Manufacturing PMIs while many other countries like Spain and Italy will release flash readings.

The United Kingdom will be publishing the final estimates of fourth-quarter GDP growth and S&P Global/CIPS Manufacturing PMI, alongside current account, Bank of England’s monetary indicators, and Nationwide housing prices. Flash data from the ONS showed Britain’s economy grew by 1 percent in the last quarter of 2021, as Omicron curbs had a less impact than initially feared.

In Asia, the week will be dominated by PMI readings, with reports from major economies including China, Japan, India, Australia, and South Korea. The PMI’s are set to reveal how manufacturers are being impacted by strong inflationary pressures, intensified by the supply disruptions caused by the war in Ukraine and China’s efforts to contain widespread virus outbreaks. Also, industrial production and business confidence date are expected from Japan and South Korea. Also, Australia’s retail sales gauge for February will be monitored to assess the health of consumer spending in the country, as analysts look for strong cues of economic recovery to give the green light for a rate hike by the Reserve Bank of Australia in the middle of the year.