Investing.com Market Review

It’s set to be a busy week with U.S. jobs data, Federal Reserve meeting minutes, and several Fed speakers. Additionally, inflation data is expected from the Eurozone and China. U.S. markets will be closed on Thursday in honor of former President Jimmy Carter. Here’s a look at the upcoming market events.

Jobs Report

Friday’s employment report is anticipated to show that the U.S. economy added 154,000 jobs in December, with the unemployment rate expected to remain steady at 4.2%. Labor market data has been volatile due to disruptions from strikes and hurricanes. November showed growth of 227,000 jobs, rebounding from October’s tepid increase.

Investors are not currently pricing in two rate cuts from the Federal Reserve this year, suggesting a gradually slowing but still solid labor market. Before Friday’s report, updates on labor market strength will be provided, including JOLTS job openings on Tuesday and private sector hiring data along with weekly initial jobless claims on Wednesday, released early due to Thursday’s National Day of Mourning.

Fed Minutes and Speakers

On Wednesday, the Fed will release the minutes from its December meeting, which included a third consecutive 25-basis point rate cut, described by Chair Powell as a “closer call”. Analysts at Deutsche Bank suggest the minutes will detail differing views on appropriate actions taken in December.

Several Fed officials will speak throughout the week, with highlights including speeches by Governors Cook and Waller on Monday and Wednesday, along with remarks from Richmond Fed President Thomas Barkin and Philadelphia Fed President Patrick Harker.

Stock Markets

Stocks declined at the end of December and the beginning of January after a strong year. The S&P 500 closed 2024 with a 23% rise, marking its largest two-year gain since 1997-1998.

The strength of the economy, particularly labor market data, will impact expectations for a third consecutive standout year and could clarify the outlook for interest rates after the Fed’s cautious pivot last month.

Investors are concerned that the upcoming jobs report could indicate an overly strong economy, with inflation resurgence under the new Trump administration posing a key risk for markets early in the year.

Inflation Data

The European Central Bank’s expectations for further rate cuts will be tested by Tuesday’s December flash Eurozone inflation data. German and French inflation figures are due on Monday. Any indications of easing inflation would give the ECB room to loosen policy and support a struggling economy.

China will report consumer and producer price inflation data on Thursday, with December seeing almost flat inflation rates and contraction in PPI, suggesting government stimulus has yet to effectively boost demand.

Oil Prices

Oil prices rose last week, driven by cold weather in Europe and the U.S., along with economic stimulus from China. Brent saw a 3.3% weekly gain and WTI futures increased by 5%.

Oil prices are expected to remain supported by increased demand for heating oil due to colder weather forecasts. A decline in U.S. crude inventories last week also supported prices. However, gains may be limited by a stronger dollar, bolstered by expectations that the U.S. will outperform other global economies this year, maintaining relatively higher interest rates.