World Week Ahead: US jobs, ECB meeting

After Federal Reserve chairwoman Janet Yellen said the central bank will "likely" raise interest rates at a meeting this month, the focus will shift to what many see as the final hurdle to an increase: February's jobs data.

Key data on the US labour market slated for release this week include the ADP private employment report on Wednesday, weekly jobless claims on Thursday and the government's latest monthly payrolls on Friday.

The Federal Open Market Committee starts its next two-day policy meeting on March 14. The Fed's Neel Kashkari is slated to speak today after most of the central bank's top officials last week signalled the time has come to lift rates.

Mrs Yellen cemented those bets with her comments on Friday.

"In short, we judge that it will be appropriate to gradually increase the federal funds rate if the economic data continues to come in about as we expect," Mrs Yellen said.

"Indeed, at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate," Mrs Yellen noted.

"The process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016," according to Mrs Yellen.

At the end of last week Fed funds futures showed a 94% chance the Fed will raise rates this month, compared with 40% a week earlier.

"There's a clear suggestion the Fed may have to step up the pace of its rate increases," Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey.

Other US economic reports due this week include factory orders today, international trade on Tuesday, productivity and costs as well as wholesale trade on Wednesday.

Last week, when Wall Street again touched fresh record highs, the Dow Jones Industrial Average rose 0.9%, the Standard & Poor's 500 Index gained 0.7%, and the Nasdaq Composite Index added 0.4%.

Bullishness is here to stay, some say.

"We may be due for a little bit of a pullback but we're still buyers on weakness because we like the longer-term outlook over the next two to three years," Terry Sandven, chief equity strategist at US Bank Wealth Management, told Reuters.

In fresh deal activity, today France's PSA Group is set to announce an agreement to buy Opel from General Motors, which would make it Europe's number two carmaker behind Volkswagen, according to media reports.

Meanwhile, Standard Life, Scotland's largest insurer, is in talks to acquire Aberdeen Asset Management. Under the terms of the potential deal, Standard Life shareholders would own 66.7% of the combined group, the companies said in a joint statement on Saturday.

Talks are still going, the companies said, Bloomberg reported.

In Europe, the Stoxx 600 Index slipped 0.1% on Friday in cautious trading ahead of Yellen's speech. Even so, the index posted its biggest weekly advance since December, according to Bloomberg.

Investors will eye a meeting of European Central Bank policymakers on Thursday for updated forecasts and comments by President Mario Draghi.

"He is again expected to hose down any thoughts of winding back on stimulus soon, notwithstanding German objections and upbeat readings on the economy," National Australia Bank analysts said in a note to investors.

European Union leaders are set to gather this week, with Brexit and Donald Trump on the agenda.

They will seek to distance themselves from Trump's views on trade and plans to ease financial regulation, Bloomberg reported.

"The EU remains strongly committed to a robust trade policy in an open and rules-based multilateral trading system," leaders will say, according to a draft version of the March 9 summit's conclusions obtained by Bloomberg News. Their stance comes at a time "when protectionist tendencies are reappearing," according to the draft.

(BusinessDesk)