Points:
According to experts, the February employment data report in the United States of America, released on Friday, will give more information about the strength of the labor market. Investors will be watching Federal Reserve Chairman Jerome Powell’s testimony before Congress on future interest rates. Equity markets are expected to remain volatile this week as the central banks of Japan, Canada and Australia meet and data from the UK continues to show how the economy held up earlier in the year.
February’s business report is the latest before the next H meeting on April 21-22, and is considered important after a strong report in January, which investors are interested in confirming expectations about future interest rates. The US economy is expected to have added 200,000 jobs in February, down from record growth in January. Another stronger-than-expected report could raise expectations for increased action by the Fed to move interest rates.
Investors expect the Federal Reserve to raise rates by 25 basis points this month, but market expectations indicate a slightly higher rate hike than previously.
Powell’s testimony before Congress will be closely watched as to whether a major rate hike is considered this month. Stocks could be volatile even before the March 5 meeting. Powell said the January report shows why the battle against inflation “will take some time.”
In the market, after a volatile week on Wall Street, the S&P 500 and the Dow Jones Industrial Average posted gains late in the session on Friday. Investors feared that the Federal Reserve would raise interest rates, causing markets to fall in February. However, another possible volatility is expected before the next H meeting in March. Meanwhile, the fourth-quarter season is coming to an end, with most companies’ consensus estimates beating.
However, the central banks of Japan, Australia and Canada will also hold meetings this week. The Bank of Japan will meet with outgoing Governor Haruhiko Kuroda before his successor Kazuo Ueda takes office on April 8. Recent economic data from Australia suggest rate hikes are unlikely. The Bank of Canada will meet for the first time when it announces a conditional moratorium in January and is expected to keep rates steady.
Finally, data from the UK will show how the economy held up at the beginning of the year, after narrowly avoiding recession in the last quarter of 2022. While economists expect GDP to have expanded just 0.1% in January compared to the previous month. economic growth is expected to show slightly more strength than expected and wage growth to be faster than expected by the Bank of England. However, the UK remains the only G7 economy that remains smaller than it was before the pandemic.
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