A look at the day ahead in European and global markets from Kevin Buckland.
The ‘Goldilocks’ view that equity investors are taking of the global economy continued into August, as a benchmark of Asian stocks hovered around Monday’s 16-month highs.
Signs of a peak for European consumer inflation to start the week echoed the narrative in the U.S., where optimism for a soft landing continues to grow.
Of course a lot can still go wrong, in this week alone. The United States has a string of key jobs reports, culminating with monthly payrolls on Friday. And the Bank of England decision on Thursday could mar the peak rates story for the world’s major central banks.
Australia’s central bank on Tuesday held interest rates at 4.1% for a second month saying past increases were working to cool demand, but warned some more tightening might be needed to curb inflation.
Optimism that Beijing will prop up the necessary parts of the economy to ensure it reaches its 5% growth goal has already come off the boil, with Chinese markets the weakest in the region amid profit-taking from Monday’s rally.
A private sector purchasing manager survey released on Tuesday showed a surprise contraction in Chinese manufacturing, in yet another sign of the post-pandemic recovery’s struggles.
The PMI parade continues through the day, with numbers from the euro zone and many of its members, including Germany, as well as from the UK and the U.S.
Whether the overall positive run of corporate earnings continues rests on the shoulders of companies including BP and Diageo in Europe on Tuesday, before we get results from a bellwether of the world economy, construction equipment maker Caterpillar, ahead of Wall Street’s opening bell.
Key developments that could influence markets on Tuesday:
Manufacturing PMIs from Sweden, Spain, Italy, France, Germany, the euro zone, UK and U.S.
UK house prices
Jobless rate from Germany, Italy
U.S. ISM, JOLTS, 1-month TB auction
European earnings including BP, Diageo, Uniper, Daimler Truck, Deutsche Post
U.S. earnings including Caterpillar, Uber, Pfizer and Merck before the bell, with Starbucks and AMD after the close
(Reporting by Kevin Buckland in Tokyo; Editing by Muralikumar Anantharaman)
