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24/06/24
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Factors Expected to Influence Markets This Week
A number of factors, especially significant economic data, are expected to influence financial markets this week. Preliminary inflation data for this month is expected from some economies across the eurozone and the Fed’s most preferred gauge for inflation (Core PCE Price Index) is expected to be released. Likewise, seemingly exhausting big tech stocks and escalating trade tensions are also factors to consider this week.
The core personal consumption expenditures price index for the U.S. is expected to be released on Friday, while final GDP for Q1 is expected on Thursday. The PCE price index data should indicate whether inflation is still reducing slowly or otherwise, but the recent readings were out of expectation.
April’s reading indicates sideway movements in inflation, so a repetition may affect the rate cuts outlook. However, markets are still looking forward to two rate cuts in 2024. Consumer confidence and new home sales data will also be released this week.
Some investors believe that tech stocks have great potential but there are worries that recent rallies may have been overstretched, so a pullback may ensue. For instance, the stock of AI darling Nvidia has increased by 155 percent since the beginning of this year. However, any pullback is likely to lead to more upside moves in the future, and even a rebound is likely in the near term if investors buy more.
Concerns about international oil demand growth seemed to have prompted a 1% decline in oil prices last Friday. The USD’s strength as well as negative economic updates from around the world may affect oil demand growth. The USD attained its highest level in 7 weeks against a basket of other countries last Friday. Potential rate cuts by the Fed are another factor weighing on oil markets as lower rates may support prices. Growing geopolitical risk premium is likely to support oil prices this week.
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