This rise continued during the first weeks of the year, particularly in Europe, with the CAC 40 which came to test a new all-time high or even the FTSE in the United Kingdom, which did the same, despite a fear of recession in the country.
Recently, the members of the Fed in the United States or the ECB in Europe, have hardened their tone a little more, indicating that the fight against inflation was far from over and that monetary policy should continue to tighten and that it should remain restrictive for longer than investors anticipated.
The latest inflation publications indeed showed a rebound in Europe, but also in the United States. Last Friday, the PCE data, closely watched by the Fed, came out higher and above the consensus, leading to a significant correction on the stock indexes.
For several weeks, the outlook for the Fed’s final rate has been steadily rising and now stands at 5.4%, compared to a final rate close to 5% last month.
This week, investors will therefore be attentive to the comments of the 6 members of the Fed, the 3 members of the ECB, as well as the report on monetary policy of the latter, expected on Thursday.
Beyond monetary policy, the markets will be attentive to the continuation of the earnings season, with in particular many unprofitable technology companies, which are very popular with certain investors and which benefited strongly from the rebound at the start of the year.
Monday, we will watch Fubo TV, Zoom or Workday. In addition, Berkshire Hathaway, Warren Buffet’s investment company gave its results this weekend, but it is above all the latter’s comments that are being listened to with attention.
He is still cautious in the short term and does not seem to want to immediately invest the 128 billion dollars in cash that his company owns, but has renewed his confidence in the American economy over the long term.
Tuesday, Target, Rivian, AMC and Monster are expected. Wednesday will be the turn of Nio, Wendy’s, Petrobras, Salesforce or Snowflakes. Thursday we will look at US consumption with Best Buy, Macy’s and Costco. ABinBev, Zscaler and Broadcom will also be monitored.
In terms of statistics, the calendar will be a little less extensive than last week, but the markets will still be very attentive to certain data. On Monday, consumer confidence and inflation forecasts in the euro zone, ahead of durable goods orders and housing promises in the United States, will be monitored.
On Tuesday, industrial production in Japan will be analyzed. Last week, inflation in the country came out at its highest for more than 40 years, while monetary policy remains very accommodating. The change of BoJ governor next month could lead to a change in monetary policy and have a significant impact on the bond market.
CPI publications in France could also show an acceleration in inflation in February. In the afternoon, the Chicago PMI index and the conference board’s consumer confidence will also be analyzed in the US.
On Wednesday, the markets will be attentive to the PMIs in China, in order to justify the rebound observed since the end of last year on the indices in the country. Retail sales in Germany could show further weakness in consumption, as last week’s Q4 GDP release pointed to a bigger-than-expected deterioration in Europe’s biggest economy.
The final manufacturing PMIs for Europe should also confirm the continued contraction in activity. The CPI in Germany, still expected above 8%, or the manufacturing PMI in the United States, will also be closely watched.
Thursday, the CPI in the euro zone will be published, still above 8%. In the afternoon, weekly jobless claims and unit labor costs should also be closely analyzed in the world’s largest economy.
Finally, on Friday, the final PMI services figures in Europe should confirm the rebound in activity in February. The services and non-manufacturing PMIs will be discovered by investors in the United States in the afternoon.
Other topics will be watched by the markets, with the meeting of leaders from Belarus (Russia’s ally) and China and the visit of the Prince of Saudi Arabia to Kiev, on the war front in Ukraine. The US is increasingly worried about China sending weapons to Russia.
On the cryptocurrency side, the price of Bitcoin corrected during Friday’s session, but does not yet confirm the return of the downtrend, although this scenario still dominates. On the upside, a breakout of $25,200 must be confirmed. On the downside, a return to 21400 is likely and below this level, the rebound observed since the beginning of the year could be invalidated.