Global financial markets were smashed last week after President Trump announced sweeping trade reforms by implementing sweeping tariffs for imports into the United States.
US stock markets experienced their worst week since the coronavirus crisis nearly five years ago, and a stronger jobs report on Friday afternoon, along with comments from Fed Chair Jerome Powell that the Fed will not be rushing to cut rates in this environment, has added to recession fears. Investors fear that there could be more pain ahead this week.
It is a much quieter macroeconomic event calendar in the week ahead, but there will be a major focus on key US inflation data later in the week. However, most traders are still expecting tariff updates to dominate sentiment as the days progress.
Here is our usual day-by-day breakdown of the major risk events this week:
The first day of the trading week has little in the way of scheduled market events across all three trading sessions, and so investors are expecting to see the market kick off on the back foot given how hard Wall Street was hit on Friday.
It is a similar story on Tuesday in terms of data releases or scheduled events. There are some sentiment updates in the Asian session in Australia and Japan; however, impact is expected to be limited in the currency environment. Canadian markets will come into focus on the New York open with the Ivey PMI data due out, and we do hear from the Fed’s Mary Daly later in the day, but once again expect geopolitical factors to dominate.
Central Banks will be in focus for the day on Wednesday with some major updates due out. The Asian session will see the initial focus on New Zealand and their latest rate call, where they are expected to cut by 25 basis points from 3.75% to 3.50%. The focus switches to Japan later in the day with BOJ Governor Kazuo Ueda due to speak in Tokyo. There is then a long break before close to the end of the day when the Fed’s latest Meeting Minutes are released.
Inflation numbers are in focus for Thursday, with key data due out of the world’s two biggest economies. First up, we have Chinese CPI and PPI data due in the Asian session, before the key event of the week soon after the New York open when the US CPI data is released alongside the Weekly Unemployment Claims data. We also hear from several central bankers during the day, including RBA Governor Michele Bullock, the MPC’s Sarah Breedon, and the Fed’s Logan, Harker, Goolsbee, and Bowman.
There is little scheduled for the Asian session on Friday, but the early focus once Europe opens will be on UK markets as the latest GDP numbers are released. There is more inflation data due out of the UK soon after the New York open with the PPI data due out, and this is followed by the University of Michigan Consumer Sentiment and Inflation Expectations data. The week is rounded out with more Fed updates, as FOMC members Musalem, Williams, and Greene all speak towards the end of the day.
