Markets Weekly Outlook – Middle East uncertainty to dominate ahead of jobs report, Nasdaq 100 at 6-month lows

Here is the summary of key events for next week in the US, Eurozone (EU), and UK:

United States

Retail Sales (Wednesday): Expected to be lifted by strong auto sales, but there is concern that rising energy costs are becoming “demand-destructive,” leaving consumers with less money for discretionary spending.

Non-Farm Payrolls / Jobs Report (Friday): This is the marquee event. While a rebound to around +60,000 jobs is expected (following a weak February impacted by strikes and weather), the underlying trend is described as “low-hire, low-fire,” with most sectors outside of government and healthcare actually losing workers over the past year.

ISM Manufacturing Index: Likely to show strength as customers rush orders to get ahead of potential price hikes in manufactured goods.

Eurozone (EU)

Economic Sentiment (Monday): Sentiment is expected to drop significantly. Consumer confidence has already “taken a nosedive” due to the dual fears of geopolitical turmoil and higher prices.

Inflation Data (Tuesday): Preliminary March readings are expected to show a sharp increase in headline inflation driven by surging petrol and diesel prices at the pump.

Manufacturing vs. Services: Analysts will be looking at the European Commission’s data to see how energy-intensive industries are holding up compared to the services sector, which has recently seen a drop in activity.

United Kingdom (UK)

BoE Decision Maker Panel (DMP) Survey: This survey of CFOs will be closely watched for wage expectations. While wage growth has been falling, “hawks” at the Bank of England are concerned that expectations remain higher than desired.

Inflation Expectations: There is specific concern regarding consumer perceptions of inflation, which have spiked alongside petrol prices. This is noted as one of the few data points that might “panic” the Bank of England into a rate hike.

Rate Hike Speculation: Despite market pricing of three hikes this year, ING notes reports that BoE Governor Bailey was “infuriated” by the hawkish repricing, suggesting the bank is further from hiking than investors believe.

China

PMI Data (Tuesday/Wednesday): The focus is on whether manufacturing returns to expansionary territory.

Official NBS PMI (Tuesday): Expected to rise to 50.0 (up from 49.0 in February). This would be a significant milestone as the index has been in contraction for 10 of the last 11 months.

Caixin (RatingDog) Manufacturing PMI (Wednesday): Expected to continue its trend of outperforming the official NBS indicator.

Japan

Tokyo CPI (Friday): Markets will closely watch inflation data for the capital. Both headline and core inflation are expected to remain stable in March, as rising gasoline prices are likely offset by government utility subsidies and steady food costs.

Economic Activity Data: February figures for Industrial Production and Retail Sales are expected to decline, partially reversing the strong gains seen in January.