Market Outlook and Global Economic Update
Positive Momentum in Wall Street and Global Markets
Wall Street is expected to maintain its near 5% gains for the year, following a record-breaking milestone. Despite a thin Friday diary, the focus is on bonds and inflation, as markets await the U.S. consumer price index revisions for last year.
Quietened Overnight Markets and Positive Economic News from Beijing
With mainland China on holiday, overnight markets were subdued, but China’s new bank loans surged to an all-time high in January, signaling expectations for more stimulus to come.
Market Sentiment in China and Beijing’s Alliance with Moscow
Dour investor sentiment in China remains, despite positive economic news, as President Xi Jinping strengthens Beijing’s alliance with Moscow, adding to concerns for overseas investors.
Record High Stocks and Political Developments in the U.S.
Wall Street’s record high stocks continue to climb, overshadowing political concerns, with the U.S. Supreme Court signaling a potential legal victory for former President Donald Trump.
Focus on Consumer Price Index Revisions and Bond Yields
Friday’s focus will be on benchmark U.S. consumer price index revisions for last year, ahead of the critical January CPI update next week, as bond yields creep higher before Friday’s open.
Global Economic Implications and Central Bank Actions
International Monetary Fund urges the Bank of Japan to consider ending its yield curve control, while European central bankers stress the need for more data to build confidence in inflation returning to 2%.
European Earnings and Concerns in Regional Banks
Ubisoft’s jump in earnings and the mixed performance of luxury stocks in Europe, alongside ongoing worries about exposure to ailing commercial real estate loans in some European banks, contribute to the market’s dynamics.
Key Diary Items and Corporate Earnings
Key diary items that may provide direction to U.S. markets later on Friday include the Canada Jan employment report, Dallas Federal Reserve President Lorie Logan’s update, and German Chancellor Olaf Scholz’s two-day visit to the United States. U.S. corporate earnings from Pepsico and Catalent are also in focus.
By Mike Dolan, editing by Ros Russell; mike.dolan@thomsonreuters.com
