Stock markets are poised to end the week on a positive note although broadly speaking, it doesn’t seem we’ve progressed in either direction over recent weeks.
Trading has become very choppy as the economic data has turned more problematic and interest rate expectations have flipped. Investors are now waiting for evidence that the January figures were the blip many expect they were, driven by unseasonably warm weather, and next Friday’s jobs report will be the first such tier-one release.
Until then, we may see more fluctuations in the markets, although there are some interesting releases in the interim, not to mention the two appearances by Fed Chair Jerome Powell in Congress during the week. I can’t imagine he will pivot too dramatically in either direction as the data has largely evolved as the Fed feared, but you never know and any shift toward the hawkish end of the spectrum may resonate more than normal given recent developments.
More signs of optimism for China
The services PMI data released today were mostly revised numbers from Europe but the Chinese Caixin release once again surprised in a positive way, which may be part of what’s lifting sentiment late in the week. The transition is clearly going well and this is the latest survey that backs up that belief.
There’s naturally still a long way to go and the scale of the recovery may depend on how much economic and monetary support is on offer over the coming months, or whether policymakers even deem it less necessary on the back of recent indicators.