Top 5 Things to Watch in Markets in the Week Ahead

Β© Reuters.

By Noreen Burke – It’s shaping up to be a busy week in the markets with the Federal Reserve meeting, a string of high-profile earnings and some key economic data on the list. While no policy changes are expected at the two-day Fed meeting, more details will likely emerge from the spending cut talks that began in June. As stock markets set for record highs, investors will be watching the earnings of tech heavyweights closely and on Thursday, investors will get a first glimpse of U.S. GDP growth in the second quarter, which is expected to be the top pick. peak of post-pandemic recovery. Meanwhile, the eurozone is due to release a plethora of data on Friday, including reports on inflation, GDP and unemployment. Here’s what you need to know to start your week.

  1. Fed conical talk

The Fed ends its two days on Wednesday and its statement will be scrutinized carefully for any mention of the timing of its asset purchase program cuts, although President Jerome Powell made it clear in his recent testimony to Congress that the economy America still needs the central bank’s full support.

In June, policymakers began debating when to start cutting back on the $ 120 billion monthly purchases of treasury bills and mortgage-backed securities.

Powell can indicate that even though a phase-down discussion has started, there is still time before officials come to a conclusion on what they will do. Policymakers should stress the risk of the fast-spreading Delta variant, which investors fear the economic recovery will derail.

Most analysts expect the Fed to give a clearer indication of its plans to cut its quantitative easing program at its annual conference in Jackson Hole, Wyoming, in late August, ahead of an official announcement on the cut more late in the year.

  1. Data dump

In addition to the Fed meeting, investors will receive an update on the strength of the US economy with a month-end data dump.

Monday sees numbers on, which are expected to hit new highs, followed by and Tuesday.

The highlight is Thursday with a first glimpse of second quarter GDP and although expectations have been revised down in recent weeks, growth is still expected to be strong at an annualized rate. This would mark the recovery of all lost production caused by the pandemic and could be the peak of the post-pandemic recovery.

The and figures are due on Friday, which include the Fed’s preferred measure of inflation.

  1. Flurry of profits

U.S. earnings are shifting into high gear and investors will be watching the biggest names in tech to assess whether a recent move away from reflation trading to growth stocks that have dominated markets for the past decade will continue.

Apple (NASDAQ πŸ™‚ and Alphabet (NASDAQ πŸ™‚ earnings on Tuesday, Facebook (NASDAQ πŸ™‚ on Wednesday, and Amazon (NASDAQ πŸ™‚ on Thursday could accelerate the return to growth.

FAANG stocks – Facebook, Amazon, Apple, Netflix (NASDAQ :), and Google’s parent Alphabet – are generally known to offer exceptional stock returns. But only Facebook and Alphabet have broken the record so far this year as investors crowded into financial firms, energy companies and other companies that are expected to benefit from the post-pandemic economic rebound.

Other financial results that will be in the spotlight include Microsoft (NASDAQ :), Tesla (NASDAQ :), Boeing (NYSE :), caterpillar (NYSE :), Pfizer (NYSE :), Procter & Gamble (NYSE πŸ™‚ and McDonald’s (NYSE :).

  1. Market volatility

Growth and value stocks have been wavering for much of the past week, as investors rate the higher variant of Delta against positive results and economic data.

“There is push and pull, there is clearly a conflict in the market,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina, told Reuters. “There is a strong difference of opinion as to whether the future is bright or if there are clouds on the horizon.”

The three major US stock indexes closed at record highs on Friday, closing above 35,000 for the first time in history after a volatile week as risk appetite rose and fell. On Monday, the S&P 500 recorded its biggest one-day decline since May before posting its biggest one-day jump since March a day later.

Profits and data could ease or exacerbate market angst over the coming week.

  1. Recovery of the euro zone

In the eurozone, data for Friday’s second quarter will give investors a glimpse of the strength of the bloc’s economic recovery after a double-dip recession as vaccinations resume.

Meanwhile, same-day figures should show inflation hit the European Central Bank’s 2% target in July. The ECB has said inflation could be allowed to temporarily exceed its target when “particularly strong or persistent” monetary support is needed.

Last Thursday ECB President Christine Lagarde said a new wave of the coronavirus pandemic could pose a risk to the eurozone’s economic recovery after the bank hinted at an even longer period of support monetary policy at its last policy meeting.

–Reuters contributed to this report