World Week Ahead: All about the economy
World Week Ahead: All about the economy
By Margreet Dietz
March 30 (BusinessDesk) - Investors will scrutinise the latest US jobs data this week, with private payrolls, weekly jobless claims and the government’s official report at the end of a holiday-shortened week.
The ADP employment report
is up first, on Wednesday, followed by weekly jobless claims
on Thursday, and the government’s nonfarm payrolls report
on Friday, a day when financial markets are closed for the
Good Friday holiday.
Last Friday, Federal Reserve
chair Janet Yellen made it clear that at least in her mind
as of now, US interest rates are going to start rising
soon.
"With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year," Yellen said in a speech in San Francisco.
Yellen pointed to payroll
gains which have averaged 275,000 per month over the past
year, saying those were “well above the pace needed to
sustain further declines in the unemployment
rate.”
“Of course, we still have some way to go
to reach our maximum employment goal,” Yellen added.
“The unemployment rate has not yet declined to the 5.0 to
5.2 percent range that most FOMC participants now consider
to be normal in the longer run.”
Yellen, who
also said that the path to higher rates would be both
gradual and varying, is scheduled to speak on Thursday in
Washington
Friday’s jobs report is expected to
show US companies added 242,000 jobs in March, and that the
unemployment rate was 5.5 percent, according to Thomson
Reuters.
“Central banks still provide us with
the biggest triggers,” Heinz-Gerd Sonnenschein, a
strategist at Deutsche Postbank in Bonn, Germany, told
Bloomberg. “Everybody is waiting to see what will happen
when the Fed acts. US data has been weaker than many had
hoped. With so many questions, you wonder what will make
people move into the market, given the S&P has given
investors very little this year.”
Last week, the
Dow Jones Industrial Average shed 2.3 percent, the Standard
& Poor’s 500 Index dropped 2.2 percent and the Nasdaq
Composite Index slid 2.7 percent.
Thusfar in 2015,
the Dow has slipped 0.05 percent, while the S&P 500 advanced
0.6 percent, and the Nasdaq has added 3.6 percent. The S&P
500’s year-to-date increase makes it one of the worst
performers among developed-nation stock markets, according
to Bloomberg.
Even so, Wall Street posted gains on
Friday, in part helped by a Wall Street Journal report that
Intel was in talks to buy competitor Altera, reminding
investors that companies still see value in the market.
Shares of Intel jumped 6.4 percent, while those of Altera
closed 28.4 percent higher.
"We've seen a lot of
M&A news recently and it’s helping the market," Stephen
Massocca, chief investment officer at Wedbush Equity
Management in San Francisco, told Reuters. "There is
definitely an M&A cycle going on, so that is a good
thing."
Other economic reports due this week
include personal income and outlays, pending home sales
index, and Dallas Fed manufacturing survey, due today; S&P
Case-Shiller home price index, Chicago PMI, and consumer
confidence, due Tuesday; PMI and ISM manufacturing indices,
and construction spending, due Wednesday; and international
trade, and factory orders, due Thursday.
And there
is also a slew of talks by US policy makers including Fed
Vice Chair Stanley Fischer today; Kansas City Fed President
Esther George, Richmond Fed President Jeffrey Lacker, and
Cleveland Fed President Loretta Mester on Tuesday; and
Atlanta Fed President Dennis Lockhart, and San Francisco Fed
President John Williams on Wednesday; and Minneapolis Fed
President Narayana Kocherlakota, and St Louis Federal
Reserve Bank President James Bullard on Friday.
In
Europe, the Stoxx 600 Index fell 2.1 percent last week,
while the UK’s FTSE 100 Index retreated 2.4
percent.
The latest data released this week include
various euro-zone confidence data, and Germany’s consumer
price index, due today; euro-zone unemployment and CPI, due
Tuesday; and euro-zone manufacturing, due
Wednesday.
Here too, companies are finding value.
On Saturday, Switzerland’s Dufry agreed to buy a majority
stake in Italy’s World Duty Free in a 1.3 billion-euro
deal.
(BusinessDesk)