Last week, the biggest news came from the Korean peninsula, where the leaders of North and South Korean met for the first time in decades. The meeting came as signs showed that the tensions in the region were easing following years of escalation. It also came a few weeks before the Korean leader meets with the United States president, Donald Trump in an historic meeting. A solution to this crisis will be a big thing not only for the peninsula but also for the world. This week, investors will still be looking at this issue and predicting the likely outcomes.
This week, another focus among investors will be on earnings. In the past few weeks, the earning season started with banking and technology companies reporting better-than-expected results. Among the major surprises were Facebook, which reported excellent results despite of its current problems. Amazon reported tremendous growth in its AWS service while Netflix continued its growth trend. This week, the season will be winding down with few large companies reporting. Traders will watch out for the McDonalds, Aetna, Apple, and Gilead Sciences among others.
Traders will also focus on the Central Banks. Most importantly, they will focus on the Federal Reserve which will release its interest rate decision on Wednesday. For this meeting, traders expect the Fed to leave interest rates unchanged. However, they will look for the statement which will give them an indication of the Fed’s thinking about future interest rates. This will be important coming at a time when the data on inflation is not as strong as they had expected.
The Reserve Bank of Australia (RBA) is also expected to release its interest rate decision this week. The bank is expected to leave interest rates unchanged at 1.50%. This will be in line with what other central banks have done recently. Last week, the BOJ and the ECB left rates unchanged, following a period of increased global uncertainty.
Economic data will also be very important this week as traders assess the economy. Perhaps, the most important economic data will be the US jobs numbers. These numbers show the investors how the economy is adding jobs and whether the wages are growing. On Wednesday, we will receive this number from the private firm ADP, which is the largest payroll processor in the country. The company will release the employment change for the month of April. Its data is expected to show that the economy added 194K jobs which will be lower than last month’s data.
On Friday, we will receive the official employment numbers. The unemployment rate is expected to drop to 4.0% while the economy is expected to add 185K jobs. As the labor market tightens, traders will be looking at its impact on wages. Will they be growing in line with the inflation rate? Traders expect the hourly earnings to grow by 0.2%, which is lower than last month’s 0.3%. The participation rate is expected to remain at 62.9%.
Other important data to be released this week will be the unemployment rate for the European Union, US Manufacturing data, EU Inflation rate, and Canada’s GDP.