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Last week, US data suggested a robust economic backdrop. As a result, fewer Fed rate cuts could be forthcoming in 2025 and this weighed on US stocks. European stocks eked out gains amid further Chinese stimulus measures.
This week, focus is set to be on US employment data for December (Friday) while Eurozone economic indicators including consumer-price inflation (Tuesday) and retail sales (Thursday) are also likely to be of note.
US continuing jobless claims fell by more than expected to 1.84mn at the end of 2024. This was the lowest level since April and suggested robust labour market conditions.
January ISM manufacturing - an American business survey - showed that sentiment improved by more than forecast, supported by the new orders and production subcomponents, while that of employment fell.
In China, the Caixin manufacturing PMI - a business survey - was down by more than expected in December due to falls in the new orders and production subcomponents. This suggested weakening economic conditions and raised speculation around further government stimulus. A Chinese official stated on Friday that bond funding will be "sharply increased" this year to fund consumer and business subsidies.
Last week, the S&P 500 fell by 0.5% as sentiment was dampened by the potential for fewer rate cuts from the Fed this year due to strong economic conditions. The Euro Stoxx 600 rose by 0.2%, aided somewhat by expectations for further stimulus from China, which could support demand for European goods.
Last week, bond yield moves were mixed, though focus remains on further expected rate cuts from the ECB in 2025 and fewer from the Fed. The 10-year German bund yield rose (bond prices fall as yields rise) by 3bps to 2.41% while the equivalent US Treasury was down by 3bps to 4.60%.
- Tue 7th US - Job openings and labour turnover survey (JOLTS), ISM services • Eurozone - Consumer prices, unemployment rate
- Wed 8th Germany - Retail sales, manufacturing orders
- Thu 9th Eurozone - Retail sales • Germany - Industrial production
- Fri 10th US - Employment report, consumer sentiment
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.