Weekly reviews

Review of the key events of the upcoming week 29.03 - 04.04


Major events of the upcoming week

The third wave of a pandemic of COVID-19 in Europe became surprise for many bidders. Against the background of messages about active implementation of the program of vaccination of the population many investors staked on rather fast recovery of the economy of the region after removal of restrictive measures. But last week many EU countries were forced to declare extension of measures of a quarantine. Some countries even toughened restrictions for movements of citizens for control of spread of a disease. There are serious fears that the situation can worsen after easter holidays.

Investors revised the forecasts and preferences and in the light of the latest events stake on faster recovery of the economy of the USA as the economy of the EU will probably be under pressure from a pandemic. These expectations are supported with large-scale measures of stimulation from FRS and the government and also moderate and positive data of macroeconomic statistics.

For the last months the situation in labor market of the USA caused serious concern in investors. Despite all realized stimulation measures, key indicators fell short of expected values. The first signs of improvement of a situation were received last week. The number of requests for receiving doles fell to an annual minimum in 684 thousand. Forthcoming week the investors will expect new signals of formation of a steady trend of recovery of labor market of the USA.



China – data on PMI of a manufacturing sector for March

China remains one of the main engines of recovery of world`s economy. The country very quickly took a situation with COVID-19 under control and for a year shows high growth rates.

The sector of production forms the basis of the Chinese economy therefore investors very attentively trace the key operational performance and data on PMI. In recent months experts paid attention to strengthening of negative trends which can slow down process of recovery of the Chinese economy. For three last months PMI of a manufacturing sector of China decreases. In February the indicator decreased to mark 50.6 of point. We will remind that the value above 50 indicates expansion and increasing production.

It is predicted that in March the indicator will be restored up to 51.0 points, but there are fears that the actual value can not hold on to expected level. In this case stock indices can appear under pressure.



Germany - Manufacturing Sector PMI Data for March

Preliminary PMI data from the manufacturing and services sectors in the EU surprised bidders somewhat. The indicators were significantly higher than forecast values. This is due to the fact that the calculation of indicators was carried out before the EU countries announced the extension of restrictive measures due to the start of the third wave of the COVID-19 pandemic.

Therefore, despite strong preliminary data, experts predict the publication of lower actual values for March. The key attention of the market by tradition will be riveted to the PMI data of the German production sector. The figure is expected to decrease to 60.6 points compared to the preliminary 66.6 points and a value for February of 60.7 points.

The market reaction will largely depend on the size of the deviation of the actual indicators from the forecast values. A stronger decline in PMI values may significantly increase pressure on the European currency, despite the fact that values above 50 indicate an increase in production.



USA - Nonfarm payroll

The central event of the week will be the US labor market report. This event will be preceded by the publication of monthly non-agricultural employment data from ADP and recent weekly data on new applications for unemployment benefits.

The latest data on applications for unemployment benefits were a pleasant surprise for investors, since for the first time in a year the indicator was below 700 thousand. Investors are optimistic about the publication of the main report on the labor market.

The whole piquance of the situation is that the publication of the report will take place on Good Friday, when trading floors in the United States, the EU and other countries will be closed. In the "thin market," the publication of Nonfarm payroll can provoke very strong fluctuations in the Forex market. Stock sites will win back data on the labor market after a long weekend.