On the second anniversary of the COVID-crash low, US shares added 1.8 per cent last week and are now less than 5.5 per cent below their all-time highs.

Last week’s gains came from robust economic data and Western unity around Ukraine, which overshadowed Fed hawkishness and surging bond yields.

The ASX200 rallied 1.5 per cent last week to close above 7400 for the first time since early January, supported by elevated commodity prices and ahead of $24 billion in dividend payments due to hit bank accounts this week, much of which will return to the market.

Here are the top five things to watch in markets this week.

1. Biden raises the stakes in the war in Ukraine

Over the weekend, US President Joe Biden raised the stakes in the war in Ukraine by calling for Russian President Vladimir Putin’s removal.

A call that has since been walked back on risks sparking the fury of the Russian leader, an escalation in the war and deepens the humanitarian crisis.

2. OPEC+ meet to discuss oil production targets

An OPEC+ meeting to discuss production targets is scheduled for Thursday.

Since OPEC+ last met, the US and the UK have banned oil imports from Russia, and the price of crude oil reached a high of $130.50.

Despite this and warnings from the International Energy Agency on the impact of losing Russian oil, the group is expected to keep current production plans and green light the return of 400k bpd in June.

3. The Fed’s preferred measure of inflation due out

The Federal Reserve’s preferred measure of inflation, Core PCE, which excludes food and energy, is released.

Economists expect to see Core PCE inflation rise from 5.2 per cent to 5.5 per cent year on year, almost three times the Fed’s 2 per cent PCE inflation target.

4. US jobs data

The US March employment report is expected to show 460,000 jobs added in March, and a fall in the unemployment rate to 3.7 per cent.

This outcome that would push the Federal Reserve closer to a 50bp hike when it meets again in early May.

5. Australian federal budget

The federal budget will be handed down on Tuesday at 7.30pm.

The faster economic recovery from the pandemic and higher commodity prices will allow the government to announce increases in spending across infrastructure, defence and directly to households to assist with “cost-of-living” pressures.

While at the same time announcing a reduced budget deficit for 2021-22 of ~$78 billion versus the $99.2 billion forecast in the Mid-Year Economic and Fiscal Outlook (MYEFO) in December.

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