The latest US jobs data and trade talks between the US and China will form a key focus this week as investors are gearing up for a widely expected Federal Reserve interest rate hike next month.
Investors will eye the ADP employment report on Wednesday, followed by weekly jobless claims on Thursday and the government's nonfarm payrolls report on Friday, while also watching the latest reading on the core PCE index, the Fed’s preferred inflation measure, due on Thursday.
First, the Fed is set to release its Beige Book on Wednesday.
Other US economic reports due this week include the S&P Corelogic Case-Shiller home price index, consumer confidence, and Dallas Fed manufacturing survey, due Tuesday; GDP, international trade in goods, corporate profits as well as retail and wholesale inventories, due Wednesday; Chicago PMI, and pending home sales index, due Thursday; as well as PMI and ISM manufacturing indices and constructing spending, due Friday.
Investors will also watch closely any developments around US trade talks, notably with China, where US Commerce Secretary Wilbur Ross is set to arrive on Saturday.
Today, US financial markets are closed for the Memorial Day holiday.
Last Friday Wall Street was mixed. The Dow Jones Industrial Average fell 0.2 percent while the Standard & Poor’s 500 Index also declined 0.2 percent. The Nasdaq Composite Index added 0.1 percent.
“Trade tensions may continue to make it hard for US stocks to make much headway in the near term as the administration’s strategy remains bold and somewhat unpredictable; however, we continue to view these moves as negotiation tactics,” LPL Financial Research chief investment strategist John Lynch said in a note on Friday.
Qualcomm is expecting to meet this week in Beijing with China’s antitrust regulators in a final push to secure clearance for its proposed US$44 billion acquisition of NXP Semiconductors, Reuters reported on Sunday, citing three sources.
An approval would depend on the progress of broader bilateral trade talks between the US and China, sources said, according to Reuters. The Qualcomm deal has got a nod from eight of the nine required global regulators, with Chinese clearance the only one pending.
Qualcomm is likely to meet Chinese regulators before Ross arrives in China, the sources briefed on Qualcomm’s discussions said, Reuters reported.
Investors will also eye oil which dropped last week amid signs OPEC and its partners might boost supply amid pressure from US President Donald Trump who’s wary of the speed at which prices have risen.
US Treasuries, meanwhile, rallied, sending the yield on the 10-year note five basis points lower to 2.93 percent on Friday.
"We don’t think, however, that the latest drop in the yield is a sign of things to come, for two reasons," John Higgins, chief markets economist at Capital Economics, said in a note on Friday.
"The first reason is the outlook for monetary policy," Higgins noted. "The second reason is the influence of other factors. Examples include more supply of government bonds in order to finance fiscal stimulus and less demand from foreign investors faced with higher hedging costs."
In Europe, the Stoxx 600 Index rose 0.1 percent on Friday.
The latest economic data about the region set for release this week include reports on Germany's unemployment and consumer price index, as well as eurozone business climate, due Wednesday; eurozone unemployment and CPI, due Thursday; as well as eurozone manufacturing PMI, due Friday.