Daily Market Diary-Five Market Developments to Keep an Eye on this Week.

Five market developments to keep an eye on this coming week

Next week, the United States will release its crucial monthly jobs report, the second quarter will begin for stock markets, OPEC will hold a meeting, and the central banks of Australia and New Zealand will announce their respective interest rate decisions.

Nonfarm payrolls

As the Federal Reserve has steadily raised interest rates over the past year, investors will be looking to Friday's nonfarm payrolls report for a snapshot of the state of the labor market.

After a gain of 311,000 in February, economists anticipate that the U.S. economy added 238,000 jobs in March. The expected 4.3% annual increase in average hourly earnings would be the slowest rate of increase since July 2021.

In the final jobs report before the Fed's May meeting, investors are divided over whether or not policymakers will raise rates. Expectations for a rate hike of 25 basis points would be bolstered by job growth above 200 thousand.

To combat inflation, Fed officials have indicated they plan to keep rates where they are for the rest of the year.

Other data, Fedspeak

In addition to this information, Federal government jargon

Economic reports on job openings in February and private sector hiring in March are scheduled for release on Tuesday and Wednesday, respectively, before Friday's crucial March jobs report.

The manufacturing and services purchasing managers' surveys from ISM are scheduled for release on Monday and Wednesday, respectively.

Loretta Mester, president of the Federal Reserve Bank of Cleveland, James Bullard, president of the Federal Reserve Bank of St. Louis, and Lisa Cook, governor of the Federal Reserve System, are just a few of the Fed policymakers scheduled to speak this week.

Officials at the Federal Reserve have said they anticipate keeping interest rates where they are for the rest of the year in an effort to bring inflation back down to the bank's 2% target. But while inflationary pressures are high, policymakers will have to consider how higher interest rates will affect financial stability in light of recent market turmoil.

Equity markets

Despite a sharp selloff in bank stocks after the failure of two regional banks sparked fears over a wider financial crisis, U.S. equity markets posted solid gains in the first quarter.

The Nasdaq's 16.8 percent quarterly gain was the highest in a calendar quarter since 2020. After falling by nearly 20% in 2022, the S&P 500 recovered and rose by 7% during the third quarter of 2023, while the Dow Jones Industrial Average gained 0.4%.

Concerned investors argue that the banking sector's turmoil makes the economy more vulnerable to a downturn after the stocks' recent gains.

There has been debate on Wall Street about whether or not a recession is priced into equities and the extent to which they have accounted for it.

Hans Olsen, chief investment officer at Fiduciary Trust Co, said, “The answer is emphatically no, the market is not priced for a recession at all.” Fiduciary Trust Co is protecting itself from potential market volatility by maintaining larger-than-usual cash reserves. This could spell “very nasty surprises” for the stock market in the coming quarters.

OPEC meeting

Following a drop to 15-month lows, oil prices have recovered, and Reuters reports that OPEC+ will likely stick to its existing deal to cut oil output at a meeting on Monday.

Oil has recovered towards $80 a barrel for Brent crude after falling to near $70 on March 20, as fears ease about a global banking crisis and as a halt in exports from Iraq's Kurdistan region curbs supplies.

On Monday, OPEC and its allies, led by Russia, will hold a virtual meeting of their ministerial monitoring panel. The panel will include representatives from Russia and Saudi Arabia.

After those discussions, OPEC+ won't get together again until June.

Most OPEC+ members have economies that are highly dependent on oil revenue, making the recent drop in oil prices a serious problem.

Rate changes by the RBA and the RBNZ

On Tuesday, the Reserve Bank of Australia will meet to decide whether to raise interest rates or keep them steady.

Investors have pretty much ruled out chances for a 25-basis point rate hike after data released last week showed that Australian inflation slowed to an eight-month low of 6.8% year-over-year in February.

Governor Philip Lowe of the Reserve Bank of Australia (RBA) recently stated that the institution was considering halting its rate increases due to the fact that monetary policy had entered restrictive territory. This halt could come as early as April, depending on the data.

The Reserve Bank of New Zealand is expected to raise interest rates by 25 basis points at its upcoming meeting on Wednesday, according to market expectations.