Chinese stocks were slightly down, awaiting further developments
Asian stock markets rose on Monday with the Nikkei hitting a new high. Investors are preparing for a busy week ahead, filled with central bank events and key data that will impact expectations for future interest rate changes.
Federal Reserve Chair Jerome Powell’s testimony to lawmakers mid-week is highly anticipated, although analysts predict a cautious approach given recent positive inflation trends.
The upcoming February payrolls report could also influence market sentiment, with forecasts indicating a steady increase following January’s strong performance.
The European Central Bank is expected to maintain its 4.0% rate but may adjust its inflation outlook.
The focus will be on the changes to the macro projections and on the tone, which we expect to be dovish but cautious – in a risk-management posture that should point to June for the first move lower in rates, NatWest Markets analysts stated in a note.
100 basis points still seems the right amount of cuts for this year, the analysts added. While the ECB is not pressed to act with urgency and may prefer to start with a 25 basis points clip, instead of our central scenario of a first 50 basis points cut in June.
The Bank of Canada is likely to hold its ground this week, with potential rate cuts not expected until later in the year.
Other significant events include President Joe Biden’s State of the Union address, U.S. primaries, and China’s National People’s Congress meeting, which could introduce new stimulus initiatives.
Chinese stocks were slightly down, awaiting further developments.
EUROSTOXX 50 futures increased by 0.2%, whereas FTSE futures decreased by 0.1%. S&P 500 futures and Nasdaq futures were trading steadily, following record closing highs on Friday fuelled by positive earnings and excitement for artificial intelligence developments.
According to BofA analyst Savita Subramanian, the S&P 500 is projected to reach 5,400 due to strong earnings. However, there is a possibility of a correction considering the market’s significant advancement.
