2023-08-16 04:32:16
Brigid Riley provides an update on European and global markets for the day ahead.
New home prices in China fell in June for the first time this year, adding to the alarming situation of the world’s second-largest economy in a sector that has become a persistent source of trouble.
Global stock markets were gloomy in the morning in Asia, with the Nikkei and Hong Kong’s Hang Seng down more than 1%, although markets will get another glimpse of economic signals from Europe and from the US with UK CPI and Fed minutes later in the day.
The bad news for Chinese real estate follows an unexpected interest rate cut by China’s central bank yesterday and a parade of weak data releases throughout this year, but the cut was an anemic response at best. to growing market calls for economic recovery.
Britain’s July CPI data is likely to contain a hint of good news, with headline annual inflation expected at 6.8% from 7.9%, although that leaves inflation far too high to the taste of the Bank of England (BOE).
Markets currently look almost certain of another hike from the Bank of England, with more than a 90% chance of a 25 basis point hike in September. Expectations are tilted in favor of even higher rates going forward, unlike the BOE’s peers in the EU and US.
The euro zone also receives economic data on Wednesday, with preliminary second-quarter GDP figures estimated at weak 0.2% growth and industrial production data expected to be negative.
With economists leaning towards a pause in European Central Bank rate hikes in September, the EU is experiencing some fears as inflation remains above target and economic data from Germany indicates the biggest Europe’s economy could be running out of steam.
Meanwhile, the Federal Reserve minutes are sure to grab the attention of markets as they seek to learn more about the Fed’s thinking process. U.S. retail sales rose on Tuesday, surprising consumers, though it didn’t shake expectations that the Fed’s aggressive tightening campaign is over.
As the talk of rate hikes continues in Western countries, New Zealand’s central bank has supported its local currency amid the gloom by extending the period it expects to hold rates until 2025. at their highest level for 14 years.
Key developments that could influence markets on Wednesday:
– UK CPI and PPI (July)
– Eurozone Q2 GDP (preliminary) and industrial production (June)
– Housing starts, building permits and industrial production in the United States (July)
– Fed Minutes
– Company results: Target, TJX, Cisco Systems, Synopsys
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