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An event-packed week excites market participants

An event-packed week excites market participants

The end of the month is usually prone to volatility increases, and movements are not correlated with fundamentals but to portfolio adjustment flows.

Even so, the week is full of important economic figures such as Friday's employment figure and events such as the meetings of the Bank of England and the European Central Bank, as well as Alphabet’s (Google) and Meta’s (Facebook) earnings reports.

Analysts expect the Bank of England to raise interest rates again after it was the first central bank to initiate the change in monetary policy. Experts forecast that BoE will continue on the same path after the Fed has explicitly communicated its intention to abandon its ultra-accommodative monetary policy.

Friday ended with notable recoveries of the North American stock indices that were threatening to break support levels without actually succeeding. This was especially true in the case of DowJones30 that tried to go below the 33,680 area throughout the past week, bouncing from here and closing the last day of the week up 1.39%.

Voices are already beginning to emerge among market professionals regarding the chance to buy low after the important corrections in the stock markets in recent weeks. But dark clouds continue to haunt the market, such as the geopolitical tension in Ukraine and the possibility of the Fed getting more aggressive with raising rate hikes. This could largely depend on the evolution of inflation, so upcoming economic data could be the market’s major driver.

The employment figure is now in a less relevant position. However, it cannot be ruled out that it could have some impact, especially if it deviates significantly from the forecasts.

One of the factors that could impact inflation is the evolution of energy prices. In this sense, there is still no reassuring news with oil reaching highs every day - on Friday, it closed at $88.81, already very close to the target that most market analysts forecast (between $90 and $100).

The OPEC countries meet this week. Analysts don’t expect any decision that could affect the price of oil beyond maintaining the production increase at 400k bpd. However, some OPEC countries cannot meet their production quota due to deficiencies.

Sources: Bloomberg, Reuters.

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