Finance Finance News Markets & Shares Strong market gains and job increases despite another interest rate bump
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Strong market gains and job increases despite another interest rate bump

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The ASX200 had its best week in three months, supported by the rebound on Wall Street and strong gains in IT stocks. Photo: Getty
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Last week, US stockmarkets extended their rebound after a punishing first half of the year.

The S&P500 finished the week 2 per cent higher while the tech-heavy Nasdaq added almost 5 per cent.

The ASX200 had its best week in three months, rising by 2.1 per cent, supported by the rebound on Wall Street and strong gains in IT and discretionary stocks.

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

1. US inflation data

Headline inflation data for June is expected to accelerate to 8.8 per cent year on year from 8.6 per cent in May.

As energy and food prices have since eased, it could again spark talk of peak inflation.

Core CPI inflation is expected to print at 5.8 per cent year on year, its lowest level in five months and well below its April peak high of 6.5 per cent year on year.

2. RBNZ to deliver another 50 basis point rate rise

The RBNZ is widely expected to deliver another 50 basis point rate hike, taking the cash rate to 2.50 per cent.

This will be the RBNZ’s third straight 50 basis point rate hike in a tightening cycle that commenced in October.

3. Australian jobs data

Australian labour force data for June is released this week.

The market is looking for an increase of 30,000 jobs and for the unemployment rate to fall from 3.9 to 3.8 per cent.

This would be an eighth consecutive increase in jobs since the easing of lockdowns in late 2021.

4. Bank of Canada to raise rates

Last month, the Bank of Canada raised its overnight rate by 50 basis points to 1.5 per cent and signalled it is prepared to act “more forcefully to tame surging inflation”.

This sets the scene for the BoC to deliver a 75 basis point rate hike this week, taking the cash rate to 2.25 per cent.

5. Q2 US earnings season

US June quarter earnings season picks up the pace this week with reports from the big US banks, including JP Morgan, Wells Fargo, Morgan Stanley and Citigroup.

According to FactSet, the S&P 500 is expected to report (year on year) earnings growth of 4.3 per cent for the second quarter, which would be the slowest rate of growth since the fourth quarter of 2020 and mark a significant slowdown from the 9 per cent seen in the first quarter.

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