(News Bulletin 247) – The New York Stock Exchange should open without a strong trend on Monday morning, the lull on the front of regional banks not overcoming the recurring questions around the economy and the Fed.
Half an hour before the opening, the ‘future’ contract on the S&P 500 index advances by 0.1% while that on the Nasdaq folds in the opposite direction by 0.1%, announcing an undecided start to the session.
Investors remain inclined to be somewhat cautious as indicators released last week complicated forecasts surrounding the timing of the Fed’s rate hike.
The Federal Reserve did not completely reassure the markets last Wednesday by declaring that it reserved the possibility of raising its rates again if the economic data justified it.
On the other hand, the markets reacted well on Friday to the announcement of job creations well above expectations, which removed the scenario of a recession.
But these continued tensions in the labor market are also likely to fuel upward pressures on wages and inflation, which could justify higher interest rates.
The probability of another rate hike of 25 basis points in June has thus fallen to 12% from 0% a month ago, according to CME Group’s FedWatch site.
In this sense, the latest US inflation statistics – which will be published next Wednesday – will be closely monitored.
The consensus of economists expects a slowdown in the consumer price index (CPI) to +0.3% in its basic version (‘core’) in April, against +0.4% the previous month.
Such a deceleration would give credence to the scenario of a soft landing for growth, already reinforced by the solid employment figures released on Friday.
Other indicators relating to inflation will be published during the week, such as industrial production prices on Thursday or import prices on Friday.
Another key question is whether the lull on the front of the US banking sector that has emerged in recent days will continue in the coming weeks.
‘But the difficulties encountered by certain regional establishments could lead to a movement of consolidation within the banking sector’, warn the teams of GlobalData.
For the moment, Comerica, KeyCorp, PacWest, Western Alliance and Zions Bank – which had corrected heavily in recent weeks – are all expected to rise, which brings some relief to investors.
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