Week Ahead: nonfarm payrolls, OPEC in focus

Global markets were concentrating on the Federal Reserve’s meeting last week which saw a second consecutive 75 basis points interest rates hike. No hints were given to investors in which direction the Fed will move in September, as Fed Chair Jerome Powell noted that it is now time to analyse the incoming data. So, this marks an important week for markets as the US will be releasing its nonfarm payroll data on Friday. The Reserve Bank of Australia has a monetary decision to discuss on Tuesday and the Bank of England will follow on Wednesday. Among the big cap companies releasing earnings this week is Starbucks, Airbnb and Alibaba. 

Nonfarm payrolls  

Market attention will focus on the US labour market on Friday which will release its nonfarm payrolls data. Last month’s report showed jobs growth accelerated +372,000 in June, whilst wages were 0.3% higher on the month, or +5.5% higher on the year. This and next month’s data will be vital for the Federal Reserve September meeting where the central bank will decide whether more rate hikes are necessary. Spiralling wages could force the Fed to move at a faster pace. The Atlanta Fed’s latest data shows wages growing 6.7% in June. 

Reserve Bank of Australia 

Annual inflation in Australia surged to 6.1% in June, which leaves analysts anticipating another double hike from the Reserve Bank of Australia (RBA) as this was the highest CPI rate recorded since June 2001, when annual inflation also reached 6.1%. Speaking at a forum in July, RBA governor, Philip Lowe, said that RBA’s goal is to return inflation to a target of 2 – 3%, “in a way in which the economy continues to grow and unemployment remains low.” In July, RBA hiked its interest rates for the third month in a row, lifting its cash rate by 50 basis points. 

Bank of England 

The Bank of England (BoE) is also expected to hold its monetary policy meeting this week with analysts anticipating a potential 0.5% hike, previously hinted by boss Andrew Bailey. UK inflation surged to 8.2% in June, up from 7.9% in May further pointing to more potential rate hikes. 

OPEC 

OPEC and OPEC+ meetings are due to take place on Wednesday. OPEC and non-OPEC partners agreed in June to stick to a planned output increase in August which would see oil production increase by 648,000 barrels per day (bpd) in both July and August. However, last week it was reported that the group was 2.84 million bpd short in June meaning it is expected to continue to underperform. Members are expected to discuss production quotas for September and perhaps the rest of 2022. 

US Earnings  

Earnings season continues to remain a focal point for many investors as more large cap companies prepare to release their earnings reports. This week, we should expect earnings reports from Starbucks, PayPal, Uber and Airbnb. Alibaba is set to report earnings on Thursday which could affect Asian markets. Pinterest is also due to report earnings on Monday, and unlike its other social media rivals the platform has been experiencing revenue growth due to an increased sales market in the US. 

Earnings calendar 

Economic calendar (BST)