The world is still concerned about the impact of the virus on the global economy, which may slow down by additional production halt, in some cases until March 1. Work has started in other provinces today, but the resuming process will be gradual. Each subsequent macroeconomic data showing potential losses in the Chinese and global economy will be awaited by investors.
This week there will also be important events from the central banking perspective. We’re talking particularly about the speech of Jerome Powell. Fed Chairman will present a semi-annual report on monetary policy before the House Financial Services Committee. Market participants will look in Powell's speech for the outlook and how the economy and monetary policy will deal with concerns about coronavirus. So far, the data published this year indicate that the trade agreement between the US and China has restored confidence and strengthened the economy. Nevertheless, some investors will probably want to know if current events may prompt the Fed to cut interest rates. The speech of the Chairman of the Federal Reserve will take place on Tuesday at 16:00 and on Wednesday, also at 16:00 Jerome Powell will submit identical remarks to the Senate Banking, Housing, and Urban Affairs Committee
A day later, on Thursday at 14:30, US inflation data will be released. According to market consensus, the price index was to rise to 2.5 percent in January. This, in turn, would mean the highest inflation in the US since October 2018. However, the core inflation may drop to 2.2 percent, which would mean the lowest level in six months. Meanwhile, on Friday at 08:00, there will be preliminary calculations of GDP growth in Germany, Market consensus assumes GDP growth in the fourth quarter by 0.1 percent in relation to the third quarter and an increase of 0.2 percent in relation to the fourth quarter of the previous year. In other words, the German economy is just above the recession border, but data from this quarter may already lead to it.
On Wall Street, earnings season is still undergoing and despite the threat to global production and the supply chain, stock indices are very close to the record levels. Nearly 500 companies reporting this week, including PepsiCo, Nvidia, Cisco, the CME group and Astrazeneca.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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