Markets will be looking, or perhaps hoping, for some signs of stabilisation this week after another bruising week for equity investors.
The week ahead is dominated by central banks and political developments, as both the US Federal Reserve (Fed) and the Bank of England (BoE) hold monetary policy meetings whilst UK and EU negotiators try to reach an agreement on a transitional Brexit deal.
At the moment it feels as though markets are being driven by every major economic data release, particularly those coming out of the US. We now know that new Federal Reserve Chairman, Jerome Powell, is particularly upbeat about the state of the US economy which suggests interest rate rises may happen quicker than expected.
China’s National People’s Congress (NPC) begins today, which continues on through to 20 March. News broke at the beginning of last week that the Communist party’s Central Committee recommended scrapping the two-term limit on the presidency, allowing President Xi Jinping to continue his reign for life – NPC delegates will vote on this amendment.
One of the main concerns in markets at the moment is that global growth is “as good as it gets” with a peak reached in growth and earnings momentum. A good indication as to whether this is the case will be the release of the global manufacturing confidence surveys on Thursday as these forward looking readings are highly correlated with future growth.
It should be a quiet start to the week, as the US is off for President’s Day today, where they will be honouring presidents of the United States. The US will be coming back into focus on Wednesday, however, as the Federal Reserve (Fed) minutes from their latest meeting will be released.
It would have been hard to have predicted a week as volatile as the last one. Unsurprisingly we are not going to predict that this week will be any more or any less volatile.
The highlight of the week will be the Bank of England (BoE) Monetary Policy meeting where it is expected that the BoE will make no changes to policy and leave interest rates at 0.5%.
This week marks the US Federal Reserve (Fed) chair Janet Yellen’s last Federal Open Market Committee (FOMC) meeting, with her term ending this week – no changes are expected to be made at the monetary policy meeting.
Another week of strong equity market performance as global investors continue to experience a solid start to the year.