Key Economic Announcements Investors Don't Want to Miss

“With these announcements, you really want to watch out for levels and trends," says Carrie Freestone, an RBC economist. “This way, you can gauge where things are going. The markets will react differently depending on how these indicators are moving." She adds that it's also crucial to understand how these indicators are intertwined.

Many economic announcements follow a regular schedule – think the Bank of Canada's interest rate decisions or company earnings reports. Other indicators, like commodity prices and the flow of politics, less so. Here are some key market-moving announcements to keep an eye on.

Inflation

One of the reasons people invest is to help protect their wealth against inflation. That's because cash tends to lose its value over time; inflation means that $10 today will buy you fewer goods a year from now.

Measured by the Consumer Purchase Index (CPI), inflation also shapes monetary policy that may move the markets.

Surging prices not only stretch your budget, but they also compel central banks to hike interest rates to cool the economy. When borrowing costs rise, businesses and individuals tend to take fewer loans, which dampens spending and investing. That may weigh on company earnings and can send stock prices lower. Inflation, when left unchecked, exacerbates market volatility.

Needless to say, inflation also affects consumer confidence, which can be a useful metric to monitor for individuals investing in companies providing goods and services.

Good to know: Statistics Canada releases the CPI monthly on its website.

Interest Rates

Through monetary policy and interest rate decisions, central banks control the amount of money being circulated in the economy. Most advanced economies have recently hiked interest rates aggressively – tightening the “money spigot," so to speak – to try to cool inflation.

Higher rates can drag down stock prices, as firms slash spending and pay more to service debt, but they can also benefit certain companies or sectors. Expectations for higher rates normally push up bond yields, something investors monitor closely.

Certain fixed-income investments like Guaranteed Investment Certificates (GICs) can benefit from rate hikes. Moreover, the cash you set aside in savings accounts can also generate higher income as rates increase.

Good to know: The Bank of Canada schedules interest rate announcements on eight fixed dates each year.

Jobs reports

A bellwether of the broader economy, the labour market offers crucial insights to inform macroeconomic policies – with effects that can ripple through the markets.

When companies are hiring and wages increase, it can generate momentum for a booming economy. The last bull market, for example, coincided with a robust job market and record low interest rates.

Employment data is important because it influences interest rate decisions. The recent tight job market – a situation where job vacancies outstrip available workers – has prompted many companies to bump up wages, which could fuel inflation. One reason behind the Canadian central bank's move to hike rates is to tame the hot labour market.

But it's a balancing act. Higher borrowing costs can lead companies to scale back operations, resulting in job losses that could tip the economy into recession. Such conditions can spook the markets.

Good to know: Statistics Canada releases employment figures each month in its Labour Force Survey.

Oil Prices

Crude oil is more than the fuel that powers cars and your flights to faraway places. The commodity is a major market mover. The price of oil is a mirror of global aggregate demand, reflecting the economic fundamentals on which financial markets are based.

Economists have found some correlation between the oil market and its impacts on a broad range of asset classes.

The pandemic offers another good example. When COVID-19 spurred the initial lockdowns, oil prices plunged as the world economy cratered. A stock market decline followed. The subsequent reopening, coupled with pent-up demand for travel, led to a rally in oil prices – and the stock market.

To be sure, falling oil prices may benefit consumers, but sometimes they also forestall a slowdown in economic activity and investments.

Good to know: There are several oil benchmarks including Brent Crude and West Texas Intermediate

Earnings Reports

Simply put, earnings reports can offer insights into how profitable a company is. Earnings season, which happens four times a year, is packed with announcements about "beating" or "missing" analysts' expectations.

Earnings expectations may be gauged in a metric called earnings per share (EPS). EPS is calculated by taking a company's net profit and dividing it by the number of outstanding common shares.

From there, investors can derive the price-to-earnings, or P/E ratio. It helps you see how the stock stacks up against others and map a stock's growth trajectory. – as well as its historical performance. In theory, a higher P/E ratio means investors may expect higher growth in the future and could be willing to pay more per share. Conversely, a low P/E may indicate that a stock is undervalued or that markets expect little earnings growth.

Good to know: Earnings release dates can be found in a number of places, such as the Earnings & Events Calendar, as well as on stock-exchange and company websites.

Politics

Government regulations and geopolitical tensions can have profound impacts on the markets.

When, for example, former U.S. president Barack Obama promised in 2008 that he'd scrap taxes on capital gains on small businesses if elected, stocks jumped shortly after. Here in Canada, shortly before marijuana's legalization, cannabis-related stocks rallied after the government introduced a tax proposal in 2017.

Political factors can also roil the markets. Investors are reminded of how politics can thrust markets into disarray with the resignation of Liz Truss, the shortest-serving prime minister in British history. Her tax cut plans sent the British pound and the financial markets into a tailspin, a trend that was briefly reversed only after her departure and the installation of a new government.

Good to know: RBC Economics publishes regular reports that analyze key macroeconomic trends.