This week, monetary policy decisions of the US, UK and European central banks as well as a busy macroeconomic data calendar and corporate financial results will be in the focus of investors.
While the data released last week supported the equity markets by strengthening the expectations that the US economy may have a “soft landing”, the monetary policy decisions to be announced this week are expected to reduce uncertainties about the upcoming period.
While the US Federal Reserve (Fed) is almost certain to raise the policy rate by 25 basis points on Wednesday, the guidance in the policy statement and Fed Chairman Jerome Powell’s statements are important for asset prices.
On Thursday, the European Central Bank (ECB) and the Bank of England (BoE) are expected to increase their policy rates by 50 basis points, while these two banks are expected to reduce the size of interest rate hikes to 25 basis points from March.
Analysts pointed out that there has been a significant decline in inflation in both the US and Europe, and reported that investors’ expectations that central banks may pause their hawkish steps are discussed more strongly in the markets.
In this context, analysts emphasised that the Fed’s policy area is wider than other banks and that clues in this direction will be sought in Powell’s statements.
Analysts noted that the intensive data calendar will also be closely monitored throughout the week and stated that especially Friday’s non-farm employment data in the US may increase volatility in the markets.
Reminding that the trillion-dollar giants will announce their financial results this week on the accelerating balance sheet season, analysts said that Apple, Amazon and Alphabet are among these companies.
With these developments, the S&P 500 index gained 0.25 percent, the Nasdaq index 0.95 percent and the Dow Jones index 0.08 percent on the New York stock exchange on Friday. Index futures contracts in the US started the new week with a decline.
Europe
While a positive course was observed in European stock markets last week, this week, in addition to the decisions of central banks on Thursday, developments in the Russia-Ukraine war and the course of natural gas prices are at the focus of investors.
Analysts noted that intense data flow, especially growth and inflation, will be followed in the region, and noted that volatility in European stock markets may remain high throughout the week.
On Friday, the FTSE 100 index in the UK rose 0.05 percent, the DAX 40 index in Germany 0.11 percent, the CAC 40 index in France 0.02 percent and the MIB 30 index in Italy 0.83 percent. Index futures contracts in Europe started the new week with a decline.
Asia
In Asia, while Chinese markets opened after a one-week holiday, a mixed course stands out in the region.
Chinese stock markets are positive after spending and travel intensity during the New Year holiday approached the levels before the new type of coronavirus (Covid-19) outbreak and there was no new increase in Covid-19 cases.
Analysts noted that the effects of the removal of Covid-19 measures on the economy can be seen in the data to be announced in China this week, noting that the Chinese government’s roadmap on how to support the economy may also become clear.
On the other hand, noting that there are technology giant companies that will announce their balance sheets in the region, analysts stated that a sales-weighted course was observed in the Hong Kong and South Korean stock markets, led by technology companies before the balance sheets.
Near the close, the Nikkei 225 index in Japan was just above the previous close, while the Shanghai composite index in China gained 0.4 percent. The Kospi index in South Korea fell 1.1 percent and the Hang Seng index in Hong Kong fell 1.7 percent.
