By Adil Yousuf
With the markets staying strong, the bearish commentary in the financial media seems to have died down. Those who have been calling for a top appear to have thrown in the towel. Clearly, the powerful rally last Friday squeezed some of those on the short side.
The U.S. stock market soared after the Labor Department issued the April jobs report on May 3, 2013. The S&P 500 broke above 1,600 and the Dow Jones industrial average closed up 142 points, to a record 14,973. It briefly broke 15,000 for the first time ever. The prices of leading commodities including crude oil and gold also rallied moderately during last week.
In the week ahead, traders and investors will be focusing on several important reports and speeches, which may affect the financial markets and set the tone for the upcoming summer months.
Following is an economic overview for the week May 6 - May 10, 2013.
(All times EST)
Monday, May 6
09:00 - ECB President Speaks:
Mario Draghi might refer to the recent rate reduction - The European Central Bank cut interest rates to 0.5% from 0.75% amid concerns over deteriorating economic outlook for the Euro zone. If Draghi provides some insight behind the future plans of the ECB's monetary policy, this speech could affect the European markets.
Wednesday, May 8
China's Trade Balance (tentative):
According to the recent monthly report, China's trade balance tumbled down to a $0.9 billion deficit; if the deficit will further rise, it could indicate that China's economic growth is slowing down and thus may adversely affect prices of commodities.
10:30 - Crude Oil Inventories:
The EIA (Energy Information Administration) will come out with its weekly update on the U.S. crude oil inventories for the week ending on May 3. In the last update for the week ending on April 26, inventories sharply rose by 12.3 million barrels to reach 1,792.2 million barrels.
China's CPI (tentative):
During March, the Chinese inflation rate rose to an annual rate of 2.1% - this rate is well below China's inflation target of 4% in annual terms. The sharp drop in inflation is another indication of economic slowdown in China. China is one of the leading importers of commodities such as gold and oil. Hence, further drop in China's inflation rate may translate into an additional drop in oil and gold prices. (See Market IQ's report on Gold).
Thursday, May 9
04:00 - ECB Monthly Bulletin:
This monthly report for April examines various economic parameters for the Euro Area such as price stability, interest rate decisions, and government's debt. This update may provide some insight on the projections of the EU growth.
07:00 - BOE Rate Decision & Asset Purchase Plan:
Bank of England will decide on its basic rate for May 2013; the Monetary Policy Committee will also announce any new changes to its asset purchase program. As of April, Bank of England left the rate unchanged at 0.5% and the asset purchase plan at £375 billion.
08:30 - U.S. unemployment claims:
This weekly report will refer to the shifts in the initial jobless claims for the week ending on May 3. In the last report the jobless claims fell by 18k to reach 324k; this forthcoming weekly update may affect the U.S. dollar and consequently commodities and stocks markets.
Friday, May 10
OPEC Monthly Report (tentative):
This monthly update will show worldwide changes in demand and supply for Crude Oil and Natural Gas as of April 2013. The update will also refer to the developments in the production of OPEC countries last month which may affect the direction of oil prices.
The financial ministers of leading countries will convene in UK - The two day summit will most likely revolve around the ongoing debt crisis in Europe and other economic global challenges.
08:30 - Canada's Unemployment Rate:
In the recent employment update for March 2013, unemployment rose to 7.2%; employment fell by 54.5k during the month. The upcoming report might affect the Canadian dollar and consequently the commodities market.
09:30 - Bernanke's Speech:
Chairman of the Federal Reserve Ben Bernanke will give a speech at the Federal Reserve Bank's 49th Annual Conference on Bank Structure and Competition, in Chicago. The title of his speech is "Monitoring Finance". If Bernanke offers some insight regarding the future steps of the FOMC, this could stir up the precious metals market.
For more insights, visit the Market IQ blog.
This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.