The upcoming week is set to be a busy one for investors and market watchers alike. Critical data is expected, including the monthly U.S. nonfarm payrolls report, the start of Q2 for equity markets, and interest rate decisions from central banks in Australia and New Zealand.
- The U.S. Labor Market Investors will be keeping a close eye on Friday’s nonfarm payrolls report to get a picture of the current state of the labor market. Despite multiple rate hikes by the Federal Reserve over the past year, the market has remained resilient. Analysts predict 238,000 jobs were added in March, with average hourly earnings growing at an annual rate of 4.3%. The March employment report will be the final one before the Fed’s May meeting, where investors are divided on whether another rate hike is in the cards.
- Additional Data and Fed Speakers Before Friday’s critical jobs report, the economic calendar features job openings data for February on Tuesday and private sector hiring figures for March on Wednesday. The ISM purchasing managers’ surveys for the manufacturing and service sectors will be released on Monday and Wednesday. Fed policymakers including Cleveland Fed President Loretta Mester, St. Louis Fed President James Bullard, and Fed Governor Lisa Cook will speak during the week. The Fed must balance managing inflationary pressures with the impact of higher interest rates on financial stability in light of recent turmoil in the banking sector.
- Equity Markets. The U.S. equity markets had a strong Q1, despite a drop in bank stocks following the collapse of two regional banks and concerns of a broader financial crisis. The Nasdaq saw its biggest quarterly gain since 2020 at 16.8%, while the S&P 500 climbed 7% after a 20% decline in 2022. However, investors remain cautious as these gains leave stocks more vulnerable to potential economic downturns, which may accelerate the recent upheaval in the banking sector. The market’s preparedness for a possible recession is still a point of contention on Wall Street, with some experts holding higher-than-average cash reserves in anticipation of future turbulence.
- OPEC Meeting OPEC+ is expected to maintain its current oil output reduction agreement during Monday’s virtual ministerial monitoring panel meeting, which will feature Russia and Saudi Arabia. This follows a recovery in oil prices after dropping to 15-month lows due to easing concerns about a global banking crisis and a halt in exports from Iraq’s Kurdistan region. Declining oil prices present challenges for most OPEC+ members, whose economies heavily depend on oil revenue.
- RBA and RBNZ Interest Rates The Reserve Bank of Australia will announce its latest interest rate decision on Tuesday, while the Reserve Bank of New Zealand will do the same in the coming week.
