November 29, 2022

Optimism slowly but steadily returns to the markets

LQDFXperts Features | Optimism slowly but steadily returns into the markets

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Data over the last two weeks bolstered optimism that the Fed can achieve a soft landing for the economy.

Optimism is seeping back into the U.S. stock market. Some investors are convinced that the economy may avoid a severe downturn despite the high inflation.

Despite a rough start to the year on fears of surging prices tipping the U.S. economy into a recession, Wall Street indexes have recovered some of their sharp losses in recent weeks on signs that inflation has peaked.

The benchmark S&P 500 has rebounded about 15% since mid-June, while the tech-heavy Nasdaq Composite has been up 20%. On top of that, the Dow closed above its 200-day moving average for the first time since April 20. Experts often view this indicator as a signal of where the market could go forward.

Retail giants report this week with essential insights into the US consumer, providing more clues about whether inflation can continue to come down. 

China’s central bank cut rates unexpectedly, raising concern over the country’s economic recovery. However, after disappointing data, China will step up macro-economic policy support for the economy.

Some economists have already pared down their growth projections.

Meanwhile, Ukraine called for new sanctions on Russia and highlighted the risks and consequences of a catastrophe at Europe’s biggest nuclear plant.

Economic events to watch the week ahead while optimism returns

Q2 GDP data for the Eurozone and Japan will be watched closely for updates on the macroeconomy.

Federal Reserve’s July meeting notes on Wednesday will shed more light on the central bank’s plans for future interest rate increases. Elsewhere, RBA meeting minutes will divulge the reasoning behind last month’s 50 basis point hike.

Also, on Wednesday, the Commerce Department will report U.S. retail sales for July, a measure of spending on goods and eating and drinking out. Expectations are retail sales grew about 0.5% in June, but indications are SA consumers are starting to feel the hurt from inflation.

On Thursday, initial jobless claims are expected to have risen slightly last week. The closely watched labour market metric has slowly trended upward in recent weeks. 

This week’s earnings will reveal more about the state of the consumer than macroeconomic data. 

The week will end with sentiment and retail sales data for the UK.

Tuesday 16 August

Australia RBA Meeting Minutes

United Kingdom Unemployment Rate (Jun), Average Earnings (Jun)

Euro Area ZEW Economic Sentiment Index (Aug), Balance of Trade (Jun)

Canada Core Inflation Rate (Jul)

Wednesday 17 August

New Zealand RBNZ Interest Rate Decision

United Kingdom Inflation rate (Jul)

Euro Area GDP Growth Rate (Q2)

United States Retail Sales (Jul), Business Inventories (Jun), FOMC Minutes

Thursday 18 August

Australia Employment Change (Jul), Unemployment Rate (Jul)

Euro Area Inflation Rate (Jul)

United States Continuing Jobless Claims (Aug), Initial Jobless Claims (Aug)

Friday 19 August

United Kingdom Gfk Consumer Confidence (Aug), Retail Sales (Jul), Public Sector Net Borrowing (Jul)

Japan Inflation Rate (Jul)

Canada New Housing Price Index (Jul), Retail Sales (Jun)

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