The Fed meeting gains additional importance, as it is Kevin Warsh’s first at the helm of the Council, while his press conference after the decision is expected to constitute an indication of the directions of the new phase.
In an economic schedule that appears relatively calm, industrial production data on Monday provides an additional reading of the physical side of the economy, after last week’s data showed wholesale prices rising at the fastest pace since November 2022.
As for the corporate sector, the markets are awaiting Accenture’s results on Thursday, as they are an indicator of the state of the information technology sector.
Investors entered the week after SpaceX went public on Friday, in the largest transaction of its kind in history, after the value of the company owned by Elon Musk reached $2.1 trillion.
The stock was traded for the first time at $150, compared to an offering price of $135, before it later rose by about 20%, making SpaceX the sixth largest company in the market.
Dan Ives, managing director at Wedbush Securities, said the SpaceX offering represents “an important moment for the technology sector,” as the artificial intelligence and data revolution takes it a step further.
The most prominent question in the markets remains whether Musk will move towards merging “Tesla” with “SpaceX”, putting under one umbrella the work of space, electric cars, robotics and artificial intelligence, especially since the two companies already have close relations.
On the other hand, attention is directed to the Federal Reserve, as the outcome of the meeting seems largely settled, with interest rates expected to be fixed now, versus the possibility of raising them by a quarter of a percentage point later this year.
But Warsh will face pressures related to high inflation data, after recent figures showed that consumer prices rose in May at the fastest pace since 2023, and producer prices rose at the fastest pace since 2022.
The file of artificial intelligence will also be present in the discussions, whether from the perspective of its impact on economic growth, the labor market, or inflation, in light of questions about whether it enhances wages or puts pressure on jobs.
In the Middle East, investors received signs that Washington and Tehran may be close to an agreement to reopen the Strait of Hormuz and reduce the escalation that has strongly affected energy markets.
The text of the agreement has not yet been announced, while accounts differed regarding its terms. Iranian media reported on the release of frozen funds, the lifting of sanctions on oil sales, and reconstruction plans, while American officials spoke of reopening the Strait, destroying Iran’s stock of enriched uranium, and gradually releasing frozen assets.
Oil prices fell after talk of the agreement, but remained higher than pre-war levels, indicating that it may take time for the market to return to normal even if the agreement is signed.
Aditya Saraswat, director of Middle East and North Africa research at Rystad Energy, said that cumulative losses amounted to one billion barrels, and could almost double by the end of the year according to basic expectations, assuming a limited agreement in June and a gradual reopening of the Strait of Hormuz starting in mid-July. (cnbc)
