Markets will be watching this week for the University of Michigan Investor Confidence in the Eurozone (Sentix) and Consumer Confidence indices in the US, as well as industrial production data for Germany, Spain, Italy and the United Kingdom for December.
After a week in which attention has been marked by central bank meetings and interest rate hikes, investors will continue to watch for the next moves on rates to curb inflation in the coming days.
According to analysts at Singular Bank, investors expect a smaller recession than initially estimated due to high levels of gas inventories, warm temperatures this winter and the stability of the labor market that are contributing to the moderation of the original recessionary path.
For Allianz (ETR) analysts:ALVGGI, markets appear to be in the midst of a transition phase, concerns about inflation subside, while concerns about growth rather increase in major markets such as the US.
In equity markets, peak inflation should provide short-term relief especially if the economic slowdown is initially milder or takes longer to materialize than anticipated, according to Allianz GI, which believes this scenario currently looks somewhat more likely in Europe than in the United States.
The manager of Magnum Sicav in Quadriga Asset Managers José Lizán in statements to EFE has indicated that next week is a transition, with a “more leisurely agenda” in which the inflation data in Germany will be known on Wednesday, and the GDP of the United Kingdom, on Wednesday.
In relation to the results, Lizán said that it is being seen that we are in a phase of uncertainty and slowdown of the economy, which impacts the accounts of companies.
He highlighted the increases in European stock markets, and commented that “at the end of the week” there has been some rotation in certain sectors.
He referred to the pharmaceutical sector that “has been the red lantern” in the last year, while energy and insurance have begun to rotate downwards in January after a good performance in 2022.
In his opinion, “you can begin to see a more micro market, more names and tacticians by companies, more linked to business results than to interest rates and central banks”, since “this scenario is internalized by everyone”.
In the US, attention will focus on February’s preliminary data on confidence from the University of Michigan, which is projected to remain broadly stable at 65.0 points, as well as weekly mortgage applications.
Also continuing to be presented with corporate earnings such as Walt Disney (NYSE:DIS) or Pepsi-Co.
In the Asia-Pacific region, investors will be watching the situation in China with the release of the CPI and the January Producer Price Index, while in Japan the January Producer Price Index will be released.
The consensus of analysts expects the January price index to remain stable at 1.8% year-on-year in January, the same growth as that observed in the previous month.
For Allianz Gl, China could start a period with investment opportunities after the withdrawal of the “Zero Covid” policy that has fundamentally improved the outlook for the Asian region, both for equities and fixed income.