Fed Meeting and U.S. Non-farm Payrolls In Focus, U.K. PMIs Awaited
U.S. stocks closed the session lower on Friday amidst a raft of mostly negative U.S. economic data. At the close in NYSE, the Dow Jones Industrial Average and the S&P 500 index both dropped 0.19%, while the NASDAQ Composite index fell 0.02%. Despite the dip on Friday, all three major U.S. indexes posted a 1% gain for the month.
The Commerce Department on Friday said that the U.S. economy grew at its weakest pace in three years in the first quarter. Due to the fact that consumer spending almost stalled, the government further cut defense spending and businesses spent less on inventories, gross domestic product increased at a 0.7 percent annual rate in the first three months of 2017, in the first three months of 2017. That was the weakest performance since the first quarter of 2014.
The first half of this week’s calendar features U.S. data on manufacturing and service sector growth on Monday and Wednesday, respectively.
Also on Wednesday, the Federal Reserve is to announce its benchmark interest rate and publish a monetary policy statement. The central bank is not expected to take action on interest rates at the conclusion of its two-day policy meeting but its post-meeting statement may provide investors with clue about the next rate hike timing. Markets are currently pricing in around a 65% chance of a rate hike in June and 80% possibility for a change in September.
Following Fed’s Wednesday’s meeting, there are a number of Fed speakers slated to make appearances, with Chair Janet Yellen due to deliver a speech titled “Monetary Policy Rules and Committees” at the Hoover Institution, in Stanford on Friday. Fed Vice Chair Stanley Fischer, San Francisco Fed President John Williams, Chicago Fed President Charles Evans, Boston Fed President Eric Rosengren and St. Louis Fed President James Bullard are also due to deliver comments on Friday.
The U.S. is to release a flurry of economic reports on Thursday, including data on initial jobless claims, the trade balance and factory orders, before the U.S. Labor Department releases its highly-awaited April nonfarm payrolls report on Friday. Analysts expect the data will show jobs growth of 185,000, following an increase of just 98,000 in March. Meanwhile, the unemployment rate is forecast to inch up to 4.6% from 4.5%, and average hourly earnings are expected to rise 0.3% after gaining 0.2% a month earlier.
In the week ahead, the euro zone will publish a preliminary report on first-quarter economic growth at on Wednesday which is forecast to show an expansion of 0.5% in the first three months of the year, accelerating slightly from growth of 0.4% in the preceding quarter. Besides the GDP report, the euro zone will also release unemployment figures for March and final readings on April’s Purchasing Managers’ Indices.
Turning to the British Pound, the U.K. will release readings on April manufacturing sector activity on Tuesday, followed by a report on the construction sector on Wednesday and the service sector on Thursday. While the manufacturing PMI is forecast to dip to 54.0 from 54.2 a month earlier, construction activity is expected to inch down to 52.0 from 52.2, while a survey on Britain’s giant services sector is forecast to slow down to 54.5 from 55.0 last month.
The Reserve Bank of Australia is to announce its benchmark interest rate and publish a rate statement on Tuesday, which outlines economic conditions and the factors affecting the monetary policy decision. Before RBA’s meeting on Tuesday, the Markit is due to announce the Caixin manufacturing index for Chinese economy. The survey, which focuses more on small and mid-sized firms, is expected to inch down to 51.0 from 51.2 in the preceding month.
Most markets will be closed in Europe, the U.K. and Asia for the May Day holiday on Monday.