Last week, US sharemarkets rebounded from oversold levels as end-of-month, end-of-the-quarter and end-of-financial year rebalancing flows kicked in and softer economic data saw bond yields retrace.
The ASX200 added 1.6 per cent last week, supported by the rebound on Wall Street and a retracement in bond yields that helped the interest rate-sensitive IT (+6 per cent) and real estate (+2.5 per cent) sectors rally strongly.
Here are the top five things to watch in markets this week.
1. US inflation data
The Fed’s preferred measure of inflation, the core personal consumption expenditures price index, is due for release and expected to fall from 4.9 per cent in April to 4.8 per cent in May.
2. OPEC meeting
OPEC+ meets this week to discuss its production plans.
The group is expected to rubber-stamp its plans to boost output by 648,000 barrels per day in July and by the same amount in August.
The meeting comes at a critical time for the crude oil market, which is caught in a tug of war between tight supply and fears of a recession that would reduce oil demand.
3. Australian retail sales
In a light week for domestic economic data, Australian retail sales for May will take centre stage.
The market is looking for a modest increase of 0.4 per cent in May after a lift of 0.9 per cent in April, reflecting the impact of cost-of-living pressures and higher interest rates.
4. Eurozone inflation upwards and onwards
Eurozone CPI inflation is likely to rise to an annual rate of 8.3 per cent in June (from 8.1 per cent in May), four times higher than the ECB’s inflation target of 2 per cent.
5. China PMIs
Chinese business conditions for June – reflected in purchasing managers’ indices – are expected to continue their recovery from their April lows as the economy reopens from COVID-19 lockdowns.
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