In the new trading week, investors are likely to focus in particular on the Fed meeting in the middle of the week. Hopes for further signs of easing in the trade dispute between the US and China could fuel risk appetite again. In addition to sporadic economic data for the United States and the People's Republic of China, it is important to keep an eye on the reporting season.
Chinese Ministry of Commerce shows willingness to talk - US tariffs on car parts come into force
In recent days, the Chinese Ministry of Commerce has shown itself to be open to talks regarding the tariff conflict. Market participants are therefore likely to bet on concrete talks and thus on a de-escalation between the world's two largest economies.
However, the 25 percent tariffs on certain car parts announced by US President Donald Trump came into force on Saturday (midnight/local time).
ISM index for the service sector in focus at the start of the week - Fed meeting could decide the weal and woe
The so-called ISM index for the service sector will be published on Monday at 16:00.
On Wednesday, attention should focus on the Federal Reserve's (Fed) interest rate decision, which is expected at 20:00. From 20:30, the FOMC press conference with Jerome Powell will be tapped for monetary policy clues.
The Fed is likely to leave the current interest rate range of 4.25 to 4.50 percent unchanged. On Sunday (May 4), the CME Group's "Fed Watch Tool" estimated the chance of a rate cut of 25 basis points at just 2.8%. The probability of an interest rate pause is assessed at 97.2 percent.
Focus remains on the US job market - Chinese economic data could provide important guidance on Friday
The weekly initial claims for US unemployment benefits will come into focus on Thursday (14:30). Following the publication of the official US labor market report last Friday, these are likely to be of even greater interest. The US jobs data showed an increase of 177,000 non-farm payrolls for the month of April, compared to 185,000 in March. Economists had expected an increase of 130,000 units. However, the increases for February and March were revised downwards by 58,000 jobs. As expected, the unemployment rate remained at 4.2%, unchanged from the previous month. Despite the uncertainties surrounding the customs dispute, the job market remains robust.
Investors are likely to be concerned about the state of the Chinese economy on Friday (05:00). New figures on imports and exports as well as the trade balance are expected. This data could therefore provide important guidance for Friday's trading.
Reporting season continues to pick up speed with second and third tier figures - Coinbase in focus on Thursday
Ford's figures are expected on Monday and those of Novo Nordisk, Walt Disney and AMC Entertainment on Wednesday. Thursday is likely to be dominated by the publication of Coinbase's figures.
Dow Jones Industrial Average Index
Source: TradingView
