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Top 5 things to watch in markets in the week ahead

0 — This week investors will get the chance to hear from several Federal Reserve officials after Friday’s employment report showed that jobs growth moderated last month, easing fears that rates will remain elevated for the rest of the year. Earnings season is entering the final stretch, and the Bank of England and Reserve Bank of Australia are to meet. Here’s what you need to know to start your week.

Fedspeak, U.S. data

The economic calendar is light in the week ahead so the focus will be on several Fed policymakers who are due to speak after the central bank last week acknowledged a recent lack of progress on inflation, although Chair Jerome Powell said he still believed rates were heading lower this year.

New York Fed President John Williams and Richmond Fed President Thomas Barkin are due to speak on Monday, followed a day later by Minneapolis Fed President Neel Kashkari. Chicago Fed President Austan Goolsbee and Fed Governor Michelle Bowman will make appearances later in the week.

Consumer confidence data on Friday will give some fresh insights into inflation expectations and the economic outlook. The weekly report on initial jobless claims is due out on Thursday.

Earnings continue

First quarter earnings season is approaching the final stretch and some of the larger caps due to report in the week ahead include Walt Disney (NYSE:DIS), Wynn Resorts (NASDAQ:WYNN) and Akamai Technologies (NASDAQ:AKAM).

Some of the small cap names reporting include nutrition company Bellring Brands (NYSE:BRBR), gambling company Light & Wonder (NASDAQ:LNW) and oil and natural gas company Permian Resources (NYSE:PR).

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Small cap stocks have lagged broader market gains this year as the prospect of the Fed keeping rates higher for longer clouded the outlook for smaller companies, which rely more heavily on debt financing and consumer spending.

The outlook for small caps may have improved after Friday’s jobs report eased fears that rates will remain elevated for the rest of the year.

Bank of England meeting

Investors will be watching the Bank of England’s rate statement on Thursday for any fresh signs that it intends to cut rates in the coming months.

While BOE officials had talked openly earlier this year about the possibility of rate cuts, more recent economic data has pained a mixed picture of price pressures in Britain’s economy, prompting markets to push back expectations for a first rate cut to September from June.

The BOE will also publish updated quarterly forecasts and analysts at ING said that any downgrades to medium-term inflation forecasts could be read as an implicit signal that policymakers are comfortable with markets pricing rate cuts this year.

Oil prices

Oil prices posted their steepest weekly loss in three months last week, with Brent declining more than 7%, while WTI fell 6.8%.

Investors were concerned that higher-for-longer borrowing costs would curb economic growth in the U.S., the world’s leading oil consumer.

Geopolitical risk premiums due to the Israel-Hamas war have faded as the two sides consider a temporary ceasefire and hold talks with international mediators.

Traders are watching whether lower oil prices might spur the U.S. government to replenish strategic reserves.

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“The oil market was supported by speculation that if WTI falls below $79, the U.S. will move to build up its strategic reserves,” Hiroyuki Kikukawa, president of NS Trading told Reuters.

RBA meeting

The Reserve Bank of Australia is to hold its latest policy meeting on Tuesday in the wake of hotter than expected first quarter inflation data and figures pointing to continued strength in the labor market.

The RBA is not expected to make any change, but market participants will be watching any comments from Governor Michelle Bullock closely after the central bank watered down a tightening bias at its last meeting in March.

After the inflation figures, markets narrowed the odds on the RBA having to raise rates again, but some of those bets were pared after Australian retail sales fell unexpectedly in March.

(Reuters contributed reporting)

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