After a volatile week that reignited concerns about the strength of the U.S. economy, investors are left wondering what's next.
Recently, Wall Street had been focused on inflation, hoping that its slowdown would prompt the Federal Reserve to cut interest rates and support stocks. However, recent turmoil has brought another concern to the forefront: the risk that markets could tumble if the economy slows too quickly.
For now, markets seem to have regained some calm. On Thursday, the S&P 500 posted its biggest gain since late 2022, rising 2.3 percent, driven by a better-than-expected weekly unemployment report.
In the coming weeks, investors will face new challenges. Fresh U.S. inflation data is set to be released on Wednesday, followed by a key speech from Federal Reserve Chair Jerome Powell at a major economic forum next week. Wall Street will be closely watching his remarks on the markets and the economy. Further details on these events and their impact on the markets are discussed later in the article.
🇬🇧 Claimant Count Change — August 13, at 9:00 GMT+3
The week kicks off with the release of the Claimant Count Change on Tuesday. This key indicator tracks the number of people claiming unemployment benefits in the UK, and it’s closely watched for its impact on markets. With expectations at 26.4K, down from the previous 32.3K, the outcome could influence assets like GBP/USD and FTSE 100. Fresh gains in GBP/USD have already cracked barriers at 1.2754/60, and a daily close above these levels could strengthen bullish signals. The FTSE 100 might also react, depending on the data's implications for the broader UK economy.
🇪🇺 GDP q/q — August 14, at 12:00 GMT+3
The next major event of the week is the Eurozone GDP q/q release on Wednesday. With a forecast of 0.3%, matching the previous quarter's growth, this data will be crucial for gauging the health of the Eurozone economy. At the start of the week, the EUR/USD pair has found some stability around 1.0921, following a volatile week, but it's important to keep an eye on this pair and key indices like the DAX. The GDP figures could either reinforce the current stability or trigger new movements in the markets, depending on whether the data meets, exceeds, or falls short of expectations.
🇺🇸 CPI and Core CPI m/m — August 14, at 15:30 GMT+3
Wednesday's release of the July Consumer Price Index (CPI) will show whether consumer inflation will continue its downward trend after dropping to an annual rate of 3% in the prior month.
The latest inflation data could influence the Federal Reserve's stance on interest rates. While easing price pressures could raise expectations of an interest rate cut, a higher reading would raise worries that rates will remain elevated.
Goldman Sachs analysts, who also maintained their target for the S&P 500 by the end of the year, wrote that they expected a stock rally as the Fed begins to cut rates, “as long as the economy is not on the brink of recession.”
For now, the consensus is that the economy is not yet there. But concerns about the likelihood of a so-called soft landing have heightened investors’ focus on the big data releases coming up.
🇬🇧 GDP m/m — August 15, at 9:00 GMT+3
The week continues with the UK GDP m/m release on Friday. The monthly growth is expected to be flat at 0.0%, a slowdown from the previous 0.4% increase. However, on a quarterly basis, the figure is projected to improve slightly to -0.1%, compared to the previous -0.3%. This data will be pivotal for assets like GBP/USD and the FTSE 100. Any deviation from expectations could spark movement in these markets, with investors particularly focused on how the UK economy's performance might influence future monetary policy and market sentiment.
🇺🇸 Retail Sales m/m — August 15, at 15:30 GMT+3
The week wraps up with the U.S. Retail Sales m/m release on Friday, with a forecast of 0.1%, slightly up from the previous 0.0%. This report will be crucial for monitoring consumer spending trends and their impact on the economy. Investors will closely watch EUR/USD as well as key indices like the Dow Jones, Nasdaq, and S&P 500. A stronger or weaker-than-expected retail sales figure could significantly influence market movements and investor sentiment.
That's it for this week! 👋
