Markets will be watching the ECB rate meeting next week

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The meeting of interest rates of the European Central Bank (ECB) and the industrial production of Germany will focus the attention of the stock markets the next five days in the eurozone, while outside it the attention it will be in the trade balances of the United States and China.

With Wall Street closed for a holiday on Monday, investors will learn in this session the data on activity in the services sector (PMI) from China and the final data from the eurozone and its main economies, and, the next day, it will be the turn of that indicator in the United States.

In the US and China there have been “good data for manufacturing production”, while those in services in the US “should improve a little and those in China will depend on the closures” due to covid-19, he pointed out to Efe the director of investments of ATL Capital, Ignacio Cantos.

On Wednesday the trade balances of the United States and China will be released, which will take the pulse of the economic situation as they are the two largest economies in the world, and the industrial production of Germany and the quarterly evolution of GDP and employment in the euro zone.

Thursday will be the busiest day of the week, as the ECB interest rate meeting will take place, which could rise up to 75 basis points after the last 50 point rise in July, according to analysts, with what which would stand at 1.25%.

The European monetary authority could follow the path of the United States Federal Reserve (Fed), which has repeatedly expressed a harsh message through its president, Jerome Powell, to keep raising interest rates to contain high inflation, even if it implies a recession.

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Inflation is the main data that conditions central banks in their next interest rate movements. In the United States, which is close to full employment, inflation fell in July while in Europe it grew again in August to 9.1%, which adds pressure to the ECB at its meeting on Thursday.

These latest data and statements by some members of the ECB, who are betting on a strong rise, make investors “bet more on a rate hike of 0.75%”, said Cantos.

In addition, he recalled that Europe will continue to be affected by the war in Ukraine, since Russia “is managing to stress markets and supplies.”

Europe, which is mostly aggravated by the energy crisis resulting from its dependence on Russian gas, will address on Friday at a meeting of the energy ministers of the European Union (EU) how to carry out the intervention in the electricity market announced this week by the European Commission (EC).

On that last day of the week, we will also know the evolution of monthly and annual inflation in China, one of the few large economies that has been able to lower interest rates by having inflation under control.

With these drops, the Asian giant “tries to stimulate the market despite the problems with the real estate market and the closures and, unless inflation goes to 5%, they will not change their monetary policy,” Cantos pointed out.

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