Daily Analysis
Ahead of the U.S. CPI data release on Wednesday, markets continued their positive correction. Both the S&P 500 (SPX) and Nasdaq 100 (NDX) stocks performed well on Monday, recovering after last week’s significant declines of 4.5% and 5.8%, respectively. Additionally, the upcoming Harris-Trump debate on Tuesday may have an impact on U.S. market sentiment, depending on the tone and content of the discussions.
In Europe, the German CPI and Great Britain’s Unemployment Rate were key macroeconomic events on Tuesday. Both reports were in line with expectations and, as a result, had little effect on the markets. However, the European Central Bank (ECB) meeting on Thursday is now the primary focus for European markets, with widespread expectations of a 25 basis point rate cut. The ECB’s decision could significantly influence market dynamics, particularly with regard to interest rate-sensitive sectors.
One of the major stories of the week is the Chinese yuan and its effect on global markets. Weak inflation data from China has raised concerns about potential deflationary pressures, which could lead to a decline in domestic demand. Economists are worried that deflation in China could have ripple effects on other global markets, threatening economic stability and contributing to a broader slowdown.
Meanwhile, in Japan, the release of GDP data on Monday, which came in below expectations, resulted in a 3.00% rise in the NIKKEI. Market analysts pointed out that disappointing household spending data has likely weakened the Bank of Japan’s (BoJ) plans for future rate hikes. This has been a significant factor behind the stock market rally, as expectations of continued accommodative monetary policy have boosted investor sentiment. The weaker GDP figures, combined with reduced household spending, have prompted speculation that the BoJ may delay any tightening measures, giving a lift to Japanese equities.
Markets will remain sensitive to these global economic events as the week unfolds, with particular attention on inflation data, central bank meetings, and any geopolitical developments.
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