Week Ahead: Top Economic Events That Will Shape the Global Market

Week Ahead: Top Economic Events That Will Shape the Global Market (March 6 – March 12, 2023)

Understanding economic events is crucial in today’s interconnected global markets. Economic indicators, policy decisions, and geopolitical developments can all

impact

financial markets significantly. Here’s a

weekly preview

of some major economic events coming up:

• Monday:

  In the US, investors will be eyeing ISM Manufacturing PMI data for insights into the health of American manufacturing. Meanwhile, across the Atlantic, Germany’s IFO Business Climate Index will shed light on the country’s economic sentiment.

• Tuesday:

  The European Central Bank (ECB) will announce its latest interest rate decision and provide an update on its economic projections. Additionally, in the US, the Consumer Price Index (CPI) will be released, giving a gauge of inflationary pressures.

• Wednesday:

  The Federal Reserve will release its Beige Book, providing insights into the economic conditions across the US. Furthermore, the Bank of England will announce its monetary policy decision and share new inflation forecasts.

• Thursday:

  Japan’s GDP data will be released, giving an indication of the country’s economic growth rate. In addition, the European Commission will release its Eurozone Economic Forecasts, which could influence investor sentiment.

• Friday:

  The US will release its Employment Situation Report, featuring data on non-farm payrolls and the unemployment rate, which can significantly influence market moves.

Monday, March 6, 2023

China:

The Caixin Services PMI (Preliminary), which measures the sentiment of private-sector service providers in China regarding business conditions, is set to be released on this day. This index is a leading indicator for the services sector in China and is closely watched by investors and economists alike.

Expected reading:

The expected reading for the Caixin Services PMI is 52.0, which indicates expansion as any figure above 50 signifies growth in the sector.

Market impact:

A stronger-than-expected reading will boost sentiment for China’s economy and potentially lead to increased investment in Chinese assets. Conversely, a weaker-than-expected reading may fuel concerns about China’s growth prospects and result in a sell-off of Chinese assets.

Eurozone:

On the same day, the ZEW Economic Sentiment (Final), a survey of investors’ expectations for the economic situation in the Euro area over the next six months, will also be published.

Expected reading:

The expected reading for the ZEW Economic Sentiment is 102.5, which indicates a more optimistic outlook as a higher figure reflects greater investor confidence in the Eurozone economy.

Market impact:

A significant deviation from expectations in the ZEW Economic Sentiment figure can have a considerable impact on markets. A stronger-than-expected reading may lead to an appreciation of the EUR exchange rate and positive sentiment towards European equity markets. Conversely, a weaker-than-expected reading could result in a depreciation of the EUR and increased volatility in European equity markets.

I Tuesday, March 7, 2023

United States: NFIB Small Business Optimism Index

This index (National Federation of Independent Business)employment, production, and capital spending.

Expected reading:

The market anticipates an index reading of 97.0.

Market impact:

A stronger-than-expected report can contribute to a rally in the US dollar and equities, while weaker data may negatively affect investor confidence.

United Kingdom: Bank of England Monetary Policy Summary & Interest Rate Decision

On the same day, the (Bank of England) is scheduled to release its monetary policy summary and interest rate decision, which can have a significant impact on the GBP exchange rate.

Market expectations for interest rates:

The market presently expects no change in the interest rate, which stands at 0.75%.

Market impact:

A surprise rate hike or dovish statement can cause notable fluctuations in the GBP exchange rate and UK equity markets.

Wednesday, March 8, 2023

United States:

ADP Employment Change: This report measures the change in private payroll employment during the previous month, which can provide an indication of the upcoming non-farm payrolls data.

Expected reading: 200,000 (continued job growth)

Market impact: A larger-than-expected increase in employment can contribute to a stronger US dollar and positive sentiment for US equities, while lower-than-expected data may negatively impact investor confidence.

Eurozone:

Harmonized Index of Consumer Prices (HICP): This measure of inflation in the Euro area can influence the European Central Bank’s monetary policy and impact EUR exchange rates.

Expected reading: 2.3% (year-over-year)

Market impact: A significant deviation from expectations can lead to increased volatility in the EUR exchange rate and European bond markets.

Thursday, March 9, 2023

United States:

Initial Jobless Claims: This report measures the number of individuals who filed for unemployment insurance during the previous week, which can provide insight into the labor market’s health.

Expected reading: 205,000 (continued decline in claims)
Market impact:: A larger-than-expected decrease in claims can contribute to a stronger US dollar and positive sentiment for US equities, while higher-than-expected data may negatively impact investor confidence.

Eurozone:

Retail Sales (MoM & YoY): This report measures the change in retail sales from the previous month and year, which can provide insight into consumer spending trends in the Euro area.

Expected reading (MoM): 0.5%
Expected reading (YoY): 3.4%
Market impact:: A stronger-than-expected report can contribute to a stronger EUR exchange rate and positive sentiment for European equities, while weaker data may negatively impact investor confidence.

VI. Friday, March 10, 2023:

United States:

• Non-Farm Payrolls & Unemployment Rate:

(The most closely watched employment reports in the US, which measure the change in overall employment and the unemployment rate during the previous month.)

Expected Reading:

• Non-Farm Payrolls:

200,000 (continued job growth)

• Unemployment Rate:

3.7%

Market Impact:

(A stronger-than-expected report can contribute to a stronger US dollar and positive sentiment for US equities, while weaker data may negatively impact investor confidence.)

Canada:

• Employment Change & Unemployment Rate:

(This report measures the change in overall employment and the unemployment rate during the previous month in Canada, which can impact the CAD exchange rate.)

Expected Reading:

• Employment Change:

30,000 (continued job growth)

• Unemployment Rate:

5.6%

Market Impact:

(A stronger-than-expected report can contribute to a stronger CAD exchange rate and positive sentiment for Canadian equities, while weaker data may negatively impact investor confidence.)

V Conclusion

As we approach the coming week, several significant economic events are set to unfold that could potentially impact the markets. Firstly, on Monday, we have the

ISM Manufacturing PMI

and

Construction Spending

reports scheduled for release in the US. A strong showing in these reports could boost investor confidence and lead to a rally in the stock market. Conversely, weak data could lead to profit-taking and a sell-off.

Moving on to Tuesday, we have the

Eurozone CPI

and

US Housing Starts

reports. Inflation figures from the Eurozone will give investors an insight into the health of the region’s economy and could influence the European Central Bank’s monetary policy decisions.

US Housing Starts

, on the other hand, will provide insights into the strength of the US housing market and could impact homebuilders’ stocks.

On Wednesday, we have the

FOMC Statement and Press Conference

in the US. The Federal Open Market Committee (FOMC) is expected to keep interest rates unchanged, but any hints towards a rate hike or an updated economic outlook could move markets significantly.

Lastly, on Thursday, we have the

Initial Jobless Claims

and

Philadelphia Fed Manufacturing Index

in the US. A strong showing in these reports could indicate a robust labor market and a growing economy, while weak data could suggest otherwise.

It is crucial for investors to stay informed about these economic releases and adapt accordingly. The markets are constantly evolving, and understanding the latest economic data can help investors make informed decisions and stay ahead of the curve. Remember, knowledge is power!

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