© Reuters

Written by Noreen Burke

Investing.com – With a turbulent month in stock markets coming to a close, investors will await the non-farm payrolls report on Friday, which may help adjust market sentiment for June. Recent encouraging economic data has raised hopes that the Federal Reserve will be able to tighten monetary policy without pushing the economy into recession. Investors will also look to PMI data from China amid growing concern about the economic outlook for the world’s second-largest economy, which has been hit by COVID restrictions. Meanwhile, Eurozone inflation data released on Tuesday is expected to hit a new record, bolstering expectations that the European Central Bank will start its own rate-raising cycle. Here’s what you need to know to start your week.

  1. Payment vouchers outside agriculture

Friday’s May Nonfarm Payrolls data is expected to show that the labor market remains resilient, as economists expect the economy to have added jobs in May after slowing from 428K in April. While still steady, it would represent the smallest job growth in about a year.

Wage growth is expected to remain strong amid a labor shortage and the unemployment rate is expected to fall to .

The economic calendar also includes data on , a closely watched indicator of job demand and weekly figures on .

ISM data and sectoral activity will be in the spotlight amid concerns about the impact of higher prices and supply chain issues. There will also be a report on this.

  1. Stocks to extend the recovery?

US stock markets rebounded on Friday, with all three major indexes posting their longest streak of weekly losses in decades after better-than-expected economic data boosted hopes that the Federal Reserve may not have to tighten as previously feared.

Friday’s data showed that the price rose more-than-expected in April and indicated a slowdown in inflation.

Consumer spending data came after the Federal Reserve’s meeting in May last Wednesday which showed that “a number” of policy makers believe that “monthly data may indicate that broader price pressures may not get worse.”

The Fed has raised rates by 75 basis points so far this year, and markets are pricing in a 50 basis point rate hike in June and July.

Some market analysts now believe that concerns about the economic impact of higher interest rates at a time when inflation may have peaked could mean the central bank in September.

US stock markets will remain closed on Monday in observance of Memorial Day.

3. Fedspeak

Investors will have a chance to hear from several Fed policy makers regarding the economic outlook over the coming week.

Fed Governor Christopher will speak on Monday, while New York Fed President John and St. Louis Fed President James, a well-known hawk, will speak on Wednesday, followed by Cleveland Fed President Loretta the following day.

The Fed will also publish its latest release on Wednesday, which covers local economic conditions in each of the Fed’s 12 districts.

  1. Chinese PMIs

China’s economy showed signs of recovery this month after the April recession, but activity is weaker than last year and many analysts expect a slowdown in the second quarter.

Investors are concerned about the lack of a roadmap to exit the country’s COVID-free strategy, which runs counter to trends in other parts of the world.

Beijing is due to release forward-looking data on Tuesday and Wednesday, with economists expecting it to remain below 50, indicating a monthly contraction in May.

China has already unveiled a broad package of economic stimulus measures, and Premier Li Keqiang has promised detailed guidelines for their implementation soon.

Shanghai is under a two-month lockdown on June 1, while Beijing reopened some sections of public transport and some malls on Sunday as infections stabilized.

  1. inflation in the eurozone

The euro zone is set to release its latest estimate of rapid inflation on Tuesday, with economists expecting the consumer price index to hit another record in May, up from 7.4% in April.

This should bolster expectations of monetary policy normalization at the European Central Bank, whose next meeting is scheduled for June 9.

Economists and markets expect a 1/4 rate hike in July, but very strong inflation could fuel talk of a bigger move, which some ECB officials are calling for.

European Central Bank President Christine Lagarde said the deposit rate should start rising in July and could be at zero or “a little bit higher” by the end of September before continuing “toward the neutral rate”.

-Reuters contributed to this report