May 2023’s End: Markets Week Ahead
As May 2023 nears its end after being quite an eventful month for the markets, traders and analysts alike may want to keep track of this month’s final market events to perhaps get a better grasp of what can be expected in June. From bank holidays to economic data releases, here are this week’s upcoming financial events:
US Markets Close on Memorial Day
While last week was certainly eventful as companies like NVIDIA soared and sent ripples across the tech market, this week kicked off on a more dull note. This is because today, Monday, the 29th, US stock markets are closed due to Memorial Day.
Memorial Day is a holiday that takes place on the final Monday of May and aims to commemorate the memory of the US military personnel that died during their service.
As such, the markets are closed on May 29th and will reopen on Tuesday, May 30th at 9:30 a.m. Eastern time.
On Friday the 26th, the S&P 500 (USA 500), the tech-heavy Nasdaq (US-TECH 100), and the Dow Jones Industrial Average (USA 30 - Wall Street) gained 1.3%, 2.19%, and 1% respectively driven by hopes of a US debt ceiling and NVIDIA’s AI gains. Therefore, it may be interesting to keep an eye on how the markets will reopen on Tuesday to see if these major Wall Street indices can sustain last week’s growth.
Moreover, in addition, to the US markets, the London Stock Exchange is also closed today due to the annual UK Spring Bank Holiday and will reopen on Tuesday.
Eurozone Flash CPI: Is Inflation Still Stubborn?
Inflation has certainly been peaked and stubborn all around the world, and the Eurozone (Euro Area) is no exception. Accordingly, while the fate of the global economy is yet to be determined, the upcoming Eurozone CPI data on Thursday, June 1st, may provide valuable insights into the state of the global economy, in general, and the European economy in particular.
While inflation may have eased a tad in the Euro Area in April to 7% after reaching a record-high of 10.6% in October, the upcoming inflation data is still expected to show that inflation is stubbornly high.
According to a survey, May’s consumer prices are expected to have risen by 6.3%. Whereas these figures are below April’s data, they may still indicate the need for further interest rate hikes. This is because, according to many, the estimated inflation figures are still below the 2% ECB inflation target, which may register further hawkish rate hikes by the central bank.
Despite this possibly dreary outlook, it appears that energy prices have dropped which may suggest inflation dropping a bit. ECB Officials including ECB’s Chief Economist, Philip Lane, commented on this by saying that they “do think that this spectacular reversal of energy prices will feed into the core, but timing is uncertain.”
As it stands, however, officials seem to be hawkish and some even pointed to further rate hikes in the ECB’s upcoming meetings. The central bank’s next meeting is scheduled for Thursday, June 15th.
According to analysts, other factors that may come into play when it comes to interest rates not only in the Eurozone but also in the US, the world’s biggest economy, are the debt ceiling deal and Fed rate hikes.
On Sunday, May 28th, a bill was released that reveals President Joe Biden and House Republicans reached an agreement in principle to raise the US debt ceiling for two years. While this may seem like much-needed hopeful news for the economy, some analysts claim that the future is still as blurry as ever.
This is because US leaders now have to convince their members to sign an agreement that may be frowned upon by many Congress members. Furthermore, these agreements must reach fruition before June 5th, since the Treasury declared that the US could run out of funds by then if a deal does not materialize. (Source:BBC)
If Congress does not agree on this debt ceiling, the US will lose money and can go into a recession, which not only affects it but also shifts the fate of other global economies. In addition, if this happens, interest rates could soar higher. Some analysts even posit that the effects of such an event could be “cataclysmic.”This, in turn, may highlight the rippling effects of the US economy on the whole world.
US Non-farm Payrolls (NFPs)
Despite the inflation, recessionary fears, the US debt ceiling crisis, and other macroeconomic headwinds, the US labor market seems to be on the mend.
In April only, 253,000 jobs were added according to the US Bureau of Labor Statistics data which was well above expectations. This time around too, the Non-farm Payrolls (NFPs) which are scheduled to be released on Friday, June 2nd, are expected to show an increase with an estimated addition of 180,000 jobs and unemployment rates rising by 3.5%.
Nonetheless, whereas historically, NFPs surpassed expectations now and then, it is important to keep in mind that nothing is certain when it comes to the markets and that many factors can influence the projected results.
Other upcoming events this week may include Japan’s unemployment rates on Tuesday, China's PMIs and Japan’s Consumer Confidence on Wednesday, and Japan’s and Euro Area’s PMIs on Thursday. In addition, traders may also want to keep track of C3.ai (AI)’s earnings on Wednesday, May 31st, to see how this company is faring in light of NVIDIA (NVDA)’s recent AI gains.
