Week Ahead

It will be a busy week in the US with labour report taking the central stage followed by ISM Manufacturing and Services PMI. Also, investors will be closely watching Q1 GDP growth releases for Switzerland, Canada, Australia, Brazil, India and inflation rates for several European countries including Germany and France. Also, speeches by several Fed officials and Bank of Canada interest rate decision should provide some update on monetary policy setting.

In the US, all eyes will be on the jobs report, with the US economy seen adding a strong 310K payrolls for May while the unemployment rate probably stayed at 3.6% for a 3rd month, remaining at the lowest since February of 2020. Wages are seen rising 0.4%, slightly higher than 0.3% in April but the annual rate is expected to have fallen to 5.2% from 5.5%, confirming a slowdown in inflationary pressures. On the monetary policy front, several Fed offcials will speek. Other important releases include the ISM Manufacturing and Services PMI, final S&P Global PMIs, Chicago PMI, Dallas Fed Manufacturing Index, JOLTS job openings, ADP employment, Challenger job cuts, factory orders, the S&P/Case-Shiller and FHFA house price index, and the Conference Board consumer confidence. Meanwhile, the earnings season continues with Salesforce, Kirkland’s, Ambarella, HP, and GameStop due to report quarterly results. 97% of S&P 500 companies have reported actual results so far, of which 77% showed a positive EPS surprise and 73% a revenue beat, according to Factset. Markets will be closed on Monday for the Memorial Day holiday.

Elsewhere in America, the Bank of Canada is expected to raise the key rate by 50bps, a third consecutive hike in borrowing costs. In the spotlight will also be: Q1 GDP growth figures for Canada and Brazil, unemployment rates for Mexico and Brazil and S&P Global Manufacturing PMIs for Canada, Brazil and Mexico.

In the United Kingdom, final PMI estimates are likely to confirm a sharp slowdown in business activity growth during May amid escalating inflationary pressures and heightened geopolitical uncertainty. Other data to follow include Nationwide housing prices, BRC retail sales monitor and the Bank of England’s monetary indicators.

Elsewhere in Europe, key inflation reports will be released for the Eurozone, including those for Germany, France, Italy and Spain. The annual inflation rate in the Euro Area is expected to surge again in May, reaching a new all-time high of 7.7% compared to 7.4% in April. Also, jobless data will come out of the Euro Area, as well as in Germany, Spain and Italy, while first-quarter GDP updates are due for France, Italy, Switzerland and Turkey. Investors will also keep an eye on the Euro Area business survey, retail sales and producer prices; Germany balance of trade, retail sales and import prices; Switzerland KOF economic barometer, consumer prices and domestic and external trade; and Turkey consumer and producer prices. Also, the Eurozone, Germany and France will publish their final estimates of S&P Global PMIs while many other countries like Spain and Italy will release flash readings.

In Australia, first-quarter GDP growth is seen slowing significantly to 0.7% after a strong 3.4% expansion in Q4 2021, when the economy rebounded from the delta-induced downturn. Also, investors will be following foreign trade data and retail sales.

In Asia, the week will be busy with manufacturing PMI releases, with China taking the spotlight, where goods producers are expected to report another month of contraction due to ongoing stringent lockdown in Shanghai and stringent restrictions in other cities. Also, key PMI readings will come from South Korea and India. Lastly, Indonesia and South Korea will publish inflation data for May, which are likely to reflect mounting global inflationary pressures.



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