Market Analytics and Considerations
Key Notes
At the beginning of a week that contains crucial inflation figures, a policy-setting gathering of the Bank of Japan, as well as the arrival of the World Economic Forum to Davos, European stock markets closed higher on Monday.
The DAX index in Germany traded 0.2percentage points up, the CAC 40 in France increased 0.1%, as well as the FTSE 100 in the United Kingdom increased 0.1percent as of 03:30 ET (08:30 GMT).
Due to the U.S. stock market being shut for the Martin Luther King Jr. vacation, transaction volumes are reduced Monday in Europe.
German retail prices decreased 1.6percentage points on a monthly basis in Dec, which was nice reprieve, and there was also some good news early on Monday. Relative to a figure for Nov of 14.9%, wholesale prices went up by 12.8percentage points over the course of the year. With a year-over-year increase of 23.8percent in April, wholesale price growth reached its peak.
However, this week’s initial attention will probably be there on Tuesday’s release of the findings of the ZEW poll of German economic mood for Jan.
With both the DAX and the CAC 40 up over 8 percent of the respondents thus far this year, European stocks have profited from this improved mood. This is expected to rise to -15.5 from -23.3 in Dec
This is mainly why monetary authorities have been able to step back from their severe tight monetary policy as there are signs that inflation is declining.
The Bank of Japan has been the main outlier, essentially keeping its extremely accommodative monetary posture even while its key peers significantly increased interest rates.
Nevertheless, when the BOJ shocked markets previous month by enlarging the range around in its field that focuses on 10-year bonds, a measure that traders viewed as a precursor to a potential rate increase, this may be changing.
As the week goes on, corporate profits are expected to improve; nevertheless, ITM Power (LON:ITM), a manufacturer of hydrogen fuel cells based in the UK, issued a statement on Monday projecting lower revenue and a greater loss for the current financial year. Its stock dropped 14%.
