This week is full of major event risk with several rate decisions and the U.S. Non-farm payroll report on Friday which could potentially add to increasing optimism and send global equity markets higher. The Reserve Bank of Australia will start things on Tuesday and is expected to keep their target rate at 3.00% which could disappoint investors who may be looking for additional stimulus. Australian retail sales expected to rise by 0.5% and the employment change predicted to drop by 25,000 will give conflicting signals latter in the week.
Weekly Outlook May 4th – 8th
This week is full of major event risk with several rate decisions and the U.S. Non-farm payroll report on Friday which could potentially add to increasing optimism and send global equity markets higher. The Reserve Bank of Australia will start things on Tuesday and is expected to keep their target rate at 3.00% which could disappoint investors who may be looking for additional stimulus. Australian retail sales expected to rise by 0.5% and the employment change predicted to drop by 25,000 will give conflicting signals latter in the week. Speaking of consumption Euro-zone retail sales are forecasted to rise by 0.1% but that mat get overlooked with the ECB rate decision scheduled for Thursday. The central bank is expected to cut rates by 25 bps points, but markets will be looking to see if policy makers will initiate non-standard measures. A rate reduction and additional efforts to improve credit markets and boost the economy could send European shares higher. The BoE rate decision will precede the ECB but isn’t expected to have a significant impact as markets are forecasting that they will keep their benchmark rate at 0.50%. The MPC stated last month that it would take two months for their initial government bond purchasing program to be completed. Therefore, don’t expect a statement following the policy meeting as nothing has changed. PMI construction and industrial production are expected to show relative improvements from the month prior which could give U.K. stocks a lift. The U.S. Non-Farm payroll report may be the biggest release for global sentiment. I considerable improvement in the labor market could spur hope of a U.S. recovery which would bring the global economy which is expected to drag the global economy along with it. Forecasts are for a job loss of 610,000 which would be down from last month’s 663,000. A print below 600,000 could send U.S. equity markets higher as they have already started to price in a recovery.
