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Top 4 economic events to affect equity markets this week

Mircea Vasiu

US and UK inflation, Zew Economic Sentiment, ECB Monetary Policy Statement – key economic events to affect equity markets this week. 

The trading week ahead is marked by important economic events that will move financial markets. Moreover, this is the Easter week, so trading will be lighter than usual, especially during the last trading days of the week.

The economic calendar is full of key economic data and events, but these four are worth watching closely:

  • US inflation
  • Zew Economic Sentiment
  • UK inflation
  • ECB Monetary Policy Statement

US Inflation

Tomorrow, the US inflation data for March is scheduled for release. The market expects inflation to rise by another 1.2% MoM after the previous 0.8% in February. However, the bias is that inflation might surprise to the upside.

The prices of goods and services increased at the fastest pace in the last four decades, while the Federal Reserve only hiked the interest rate 25bp from close to zero. As such, higher than expected inflation data supports a rate hike of 50bp in May.  

Zew Economic Sentiment

The Zew Economic Sentiment is a diffusion index in Germany. It is a survey of close to 300 German institutional investors regarding the forward-looking economic outlook in the Euro area. 

The Zew is viewed as a reliable indicator of economic growth, and now it points out that the Euro area might head into a recession. With inflation running way higher than the ECB’s target, a recession complicate things for the central bank. 

UK Inflation

On Wednesday, the yearly inflation in the UK is expected to rise by 6.7% in March, from 6.2% in February. The FTSE 100 index bounced from its 2022 lows and now threatens with a new high. If inflation data misses the estimate, the UK equity market is one of the first to react.

ECB Monetary Policy Statement

The main event of the week ahead is the ECB Monetary Policy Statement. No one expects the ECB to hike the rates this week, but the tone used in the statement and at the press conference is enough to move markets. 

The ECB faces a difficult task. Inflation is running hot in Europe, but the war in Ukraine makes the ECB reluctant to normalize the monetary policy.