Markets are balancing ahead of US employment and manufacturing data

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Global markets continue to balance in the absence of strong new drivers that could improve investor sentiment and push up the stock indices, which stumbled at the beginning of the year and did not live up to the expectations that investors placed on them.

The overall situation in the markets remains extremely confusing. On the one hand, there are massive and unprecedented measures to support the US economy, which include a wide range of fiscal stimuli, but on the other hand, the factor of the raging COVID-19 pandemic has not disappeared anywhere, vaccinations are not going as vigorously as we would like. Also, the country’s economy continues to experience widespread problems, and the large-scale measures to support the population and business promised by J. Biden have not yet begun to be implemented.

Against this background, what can be expected from the American stock market?

I believe that the overall negative trend may continue in the coming week. This means that after the local upward rebound of the stock indices, a resumption of decline can be expected.

Now the markets have completely switched to corporate reporting, which is not so unambiguous. Also, the published data of economic statistics as a whole are very far from optimistic. But for now, investors believe that America’s economy will recover more vigorously this year, assuming a V-shape. This restrains the local stock market from continuing the collapse, but does not guarantee its elimination.

A lot of important economic data is coming out this week. First of all, the figures for business activity in manufacturing sectors and, of course, the publication of the figures for employment in the non-agricultural sector of the American economy will be interesting. These data can both give an incentive to the growth of demand for companies’ shares, and vice versa, renew the pressure on them.

What to expect soon

Assessing this picture in the markets, we are still far from optimistic values. I believe that the overall negative dynamics will continue for now. In the best case, stock indices will continue to move sideways, along with the forex market.

By FXbro