As we start the week, investors are eagerly keeping an eye on the pulse of the world economy, and it's shaping up to be a rollercoaster ride.
To begin with, the European stock markets are expected to open on a softer note, as investors grapple with the implications of stronger-than-expected U.S. payroll data and escalated Sino-U.S. tensions. DAX futures in Germany are trading 0.5% lower, CAC 40 in France has dipped 0.6%, and FTSE 100 futures in the UK fell 0.4%. The European bourses are likely to mirror the downward trend set by their Asian counterparts.
On the other side of the pond, the Federal Reserve's interest rate hike of 25 basis points on Wednesday has raised concerns about a possible recession in the world's largest economy this year. The strong U.S. jobs data has provided the Fed with ample room to continue tightening interest rates, a move that is expected to combat inflation. However, this has made investors jittery, leading to a dip in global stocks.
As for the Eurozone, the European Central Bank hiked interest rates by 50 basis points last Thursday and hinted at another hike in March. ECB President Christine Lagarde cited high core inflation as the reason behind the move.
In the energy sector, oil prices are rebounding after last week's losses, with positive comments on a potential recovery in Chinese demand this year from the International Energy Agency. IEA head Fatih Birol indicated that early signs point to a stronger-than-anticipated rebound in China's economy, which is likely to result in a healthy boost to crude demand from the world's largest importer.
On Monday, investors will have a lot on their plate with several important data releases to keep an eye on. Germany is set to release its delayed January inflation data, and ahead of that, the country has recorded a 3.2% growth in its factory orders in December, a welcome rebound after a 4.4% slump in November. Eurozone retail sales for December are expected to show a fall of 2.5% on the month and an annual drop of 2.7%. Next up, the United Kingdom will publish its Construction PMI, a key measure of the country's construction industry activity. Across the pond in Canada, the Ivey PMI is expected to be released, offering insights into the nation's economy and its direction. To top it off, European Central Bank President, Christine Lagarde, will deliver a speech in the Eurozone, which is sure to generate plenty of interest and impact market sentiment. As always, these announcements will play a crucial role in shaping the market's outlook and investors will be eagerly watching to see how these numbers stack up.
Keep up with the financial markets, know what's happening and what is affecting the markets with our latest market updates. Analyze market movers, trends and build your trading strategies accordingly.
