Markets This Week: Are Inflation Fears Rising Again?

The week ahead is a crucial one for investors in the financial markets to determine the course of monetary policy in the United States. US jobs data indicated that the economy added fewer jobs than expected, adding 187,000 jobs in July, below expectations of 205,000. The unemployment rate fell to 3.5%, while the wage rate rose slightly to 0.4%. As for private sector jobs, the US economy added 324,000 jobs, less than the previous reading of 455,000.


On Thursday, investors will be awaiting consumer price data in the United States, where expectations indicate that inflation will rise by 3.3% after declining for 12 months in a row. If forecasts are correct, this would be the first rise in inflation in around a year, which could prompt the Fed to continue tightening monetary policy and raise the possibility of raising interest rates at its September meeting, and keeping them higher for longer than previously expected.


The Federal Reserve indicated that some of the factors that fuel inflation, such as food and oil prices have risen again, thus increasing fears of higher inflation. Analysts expect that this could have a negative impact on gold and stock prices, and that it may positively affect the US dollar.


Taking a look at last week’s highlights:


1.The Bank of England raised interest rates by 25 basis points to 5.25% to control inflation. The central bank expects inflation to drop further to around 5% this year and back to the target of 2% by early 2025.


2. Apple and Amazon business results exceeded expectations, with Apple achieving revenues of $81.80 billion, compared to expectations of $81.69 billion, with earnings of $1.26 per share, compared to expectations of $1.19 per share. Amazon reported revenue of $134.4 billion, beating expectations of $131.34 billion, with earnings per share of $0.65, beating expectations of $0.34.


3. Oil prices rose in the previous week by 1.7%, after Saudi Arabia announced extending production cuts by 1 million barrels per day during September.



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