Yazar: Noreen Burke
Investing.com – Investor interest will return to US inflation figures in the coming weeks, following a surprise jobs report released on Friday. Signs of increasing inflation pressures could reignite debate about when the Fed may begin tightening monetary policy. Many names from the Fed will make speeches and their statements will be watched closely. Energy investors will also closely monitor the shutdown of the US’s largest gas pipeline after the ransomware attack. The fierce rivalry between value and growth stocks looks set to continue. The earnings season is slowly coming to an end. The UK will share its first quarter GDP figures.
What you need to know to start the new week:
1. Inflation fears
The US economic calendar will have CPI figures for April on Wednesday. Investors are worried that increasing price pressures could cause the Fed to begin withdrawing monetary support.
As inflation rises, Fed politicians have repeatedly pointed out that this increase is due to temporary factors.
We will see the inflation figures next week. U.S. job growth fell sharply last month, with only 266,000 jobs created in the economy, according to data from Friday. Expectations were for an increase of 978,000. Surprisingly weak data has raised skepticism about some investor expectations that the Fed may begin to reduce stimulus measures this year.
PPI will be released on Thursday and we will get retail sales data on Friday. Retail sales, which rose in March, were supported by incentive checks and this effect is expected to extend into April.
2. Closing the pipeline
Colonial Pipeline, the top US fuel pipeline operator, shut down its entire network after a cyberattack on Friday, with no word on when it would open.
Colonial is the main source of gasoline for the East Coast and also serves the largest airports in the United States. The incident showed how vulnerable the US energy infrastructure is to cyberattacks.
An ongoing interruption in networking could lead to price increases for gas pumps ahead of the summer travel season. This could hit US consumers and the economy as pandemic restrictions are eased.
The outage could also affect oil refineries on the Gulf Coast – due to the partial offline distribution system, refineries could reduce crude oil processing.
3. Fed speeches
With the price of everything from raw materials to real estate rising, some investors are skeptical of the Fed’s assurance that inflation as a result of the government’s massive economic stimulus programs will be temporary.
Many from the Fed will be speaking in the coming days. Among them is Vice President Richard Clarida, shortly after inflation data was released on Wednesday.
Other names include Fed Governor Lael Brainard, Chicago Fed President Charles Evans, San Francisco Fed President Mary Daly, New York Fed President John Williams and Dallas Fed President Rob Kaplan.
4. Fierce conflict in stocks
Some tech stocks rallied on Friday after the disappointing jobs report, while some portfolio managers say the stunning results shared by many of the big tech companies aren’t enough to keep them making big bets in the industry.
In contrast, these fund managers say they continue to gravitate towards value and cyclical stocks, whose wealth is closely tied to economic conditions, in anticipation that the economic recovery will take longer and be more gradual than expected.
The trend looks set to continue, and investors will continue to watch the results of names like Disney, Marriott, AirBnB and Tyson Foods. The first quarter season, with larger-than-expected profits, is drawing to a close.
5. UK GDP data
The UK will release first-quarter GDP data on Wednesday and is expected to confirm that the recovery from the outbreak continues.
Although growth is expected to be smaller for the whole period, March figures could rise significantly as vaccine distribution paves the way for the relaxation of restrictions.
Last week, the Bank of England said the economy would be back to pre-pandemic three months earlier than expected, in the last quarter of 2021, and it raised its growth forecast for 2021 to 7.25% from 5.0% in February.
This will be the fastest annual growth ever since 1941, but after a 9.8% contraction in 2020, which was a 300-year low.
– This news has the contribution of Reuters.