Seven Fundamentals to watch out for this week

here are seven fundamentals to watch out for this week:

From economic data releases and central bank meetings to earnings reports and geopolitical tensions, this week is packed with events that could significantly impact asset prices. Keep a close eye on these seven fundamentals to make informed investment decisions.

1) Inflation-based mood: Markets remain optimistic about the prospects of falling inflation and interest rates. That is the main driver of stocks and Gold to the upside, and the US Dollar to the downside. I expect this broad risk-on mood to continue until Wednesday, with occasional distractions from second-tier economic indicators, such as New Home Sales and the CB Consumer Confidence. 

2) Longer ceasefire in the Middle East? Another source of hope comes from the success, so far, of the deal between Israel and Hamas. Monday marks the fourth and last day of the original accord, which has an extension option. If additional kidnapped Israelis are released, more Palestinian prisoners are released and the ceasefire holds, it would provide more support to markets and weigh on oil prices. 

3) Rate decision in New Zealand, Wednesday. The Reserve Bank of New Zealand is set to leave rates unchanged for the fourth consecutive time. Will it also hint of a cut? Apart from implications for the Kiwi, a potential hint of an upcoming reversal – which has low chances – would have implications beyond the small nation, and would boost the global mood. 

4) German and Spanish inflation figures: The first and fourth-largest economies in the eurozone publish their preliminary CPI data early. Further signs of falling prices would support stocks and weigh on the Euro. A bump up, as expected in Spain, would help the Euro, and would somewhat dampen the mood.

5) US Core PCE, Thursday. While CPI is the critical inflation report, PCE is the one the Fed watches more closely. It is expected to show a decline, confirming data seen in the CPI. Any surprising rise would hurt the mood. I expect further decline. 

6) OPEC+ meetings, Thursday: Russia, Saudi Arabia, and other countries postponed their deliberations after failing to agree on the next steps. Crude costs are lower, but the members are reluctant to slash output further. An accord to reduce production would support oil, and ongoing disagreement would hurt it.

7) US ISM Manufacturing PMI, Friday. The Nonfarm Payrolls report is due out only next Friday, but the first hint is out this week. The manufacturing sector has been lagging behind the services one, but economists expect an improvement. Without a rise above 50 – the threshold separating expansion and contraction – markets will be convinced that interest rates will remain low. All in all, bad news for the US economy remains good news for markets.

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