US: Eyes on Jerome Powell’s appearance at the Economic Club After last week’s excitement, it is a much quieter week for US data and events. With activity data softening and inflation cooling, the market remains unconvinced about the Federal Reserve’s desire to raise interest rates a “couple more times” as outlined by Fed Chair Jerome Powell this week. A recession appears to be the base case with expectations of policy easing in the second half of the year, which is putting downward pressure on the dollar and US Treasury yields. ...

The earnings bonanza rumbles on, with U.S. media and consumer stocks and big oil and renewables topping the list in Europe. Australia and India’s central banks are navigating the shifting sands of data and markets are digesting what the world’s top central banks have to offer. The question is what impact this will have on bonds and stocks markets after a stellar January? Here’s a look at the week ahead in markets from Kevin Buckland in Tokyo, Amanda Cooper, Dhara Ranasinghe and Karin Strohecker in London and Lewis Krauskopf in ...

European equity funds led money inflows in the week ended Feb. 1, buoyed by the lifting of China’s COVID-19 restrictions and hopes that the Federal Reserve would slow rate hikes as inflationary pressures ease. European equity funds secured net inflows of $6.35 billion in the week, continuing their strong showing this year as investors hunt for battered stocks, which are available at cheaper valuations than U.S. shares. Goldman Sachs expects European stocks’ outperformance to continue this year, as the earnings outlook for its commodity and financial sectors look stronger due ...

China’s move this week to streamline stock market listing rules is unlikely to result in a flood of initial public offerings, bankers say, citing the prospect of state intervention on national security and other grounds that would result in delays. Beijing published draft rules on Wednesday to broaden its fledgling registration-based IPO system, expand the U.S.-style mechanism to all corners of China’s stock market in a shift designed to speed up listings and corporate fundraising. Under the new system, China’s stock exchanges will themselves vet IPOs with a focus on ...

The mood at the annual ‘Miami hedge fund week’ gatherings this week was as bright as the winter sunshine, with one notable dark cloud on the 2023 horizon: U.S. stocks. The S&P 500 has just had its first January rise since 2019 – and its second best start to a year since 1989 – while the Nasdaq’s 10.7% surge marked its best January since 2001. But the message from Miami was pretty clear: don’t chase the rally. ‘FOMO’ may yet set in if the move continues, and the Fed’s apparent ...

Investors showed “no inflation fear” in the run-up to this month’s key central bank meetings, ploughing money into bonds and stocks in the week to Wednesday, a report from BofA Global Research showed on Friday. Equity funds got a $16 billion injection while bonds saw inflows of $7.8 billion, BofA said citing EPFR data, as investors showed conviction in both asset classes. In another sign of investors’ confidence that global inflation may have peaked, cash funds saw $300 million in outflows, while gold funds logged outflows of $1.3 billion. The ...

A global stock rally, powered by hopes of central banks ending aggressive rate rises, ran into roadblocks on Friday following weak earnings from U.S. tech giants and as key U.S. jobs data loomed. The MSCI World Stock Index slipped 0.2%, but was still near its highest since last August following a sharp rebound in recent weeks on hopes that central bank rate hikes are nearing an end. Wall Street stock futures fell sharply, with contracts on the tech-heavy Nasdaq 100 2% lower, on disappointing earnings from Google, Apple (NASDAQ:AAPL) and ...

Has inflation peaked in Australia? On 7 February, the Reserve Bank of Australia (RBA) is expected to hike rates by 25bp. Some months ago, when the RBA adopted the smaller 25bp hike approach, it became obvious that the central bank was not operating on a data-dependent policy. As it got closer to the peak in rates, it would simply proceed at a slower pace to avoid, or at least limit, the risk of overtightening. Considering the much higher-than-expected inflation readings over the past two months, we have increased our peak ...

Goldman Sachs (NYSE:GS) on Thursday revised its forecast for emerging market equities upwards as it sees the developing world benefiting from the reopening of China’s borders, improving European growth prospects and softening U.S. inflation. The investment bank sees MSCI’s index of emerging market shares hitting 1,150 over the next 12 months, representing a near-10% jump from current levels, and up from the bank’s previous target of 1,075. “These forecasts do suggest further EM outperformance, though this view is driven by returns in North Asia and Middle East and North Africa ...

European borrowers sold a record 280 billion euros ($304 billion) of debt in January, in a jump outpacing U.S. peers, to take advantage of tumbling borrowing costs and better-than-expected economic conditions. It is an encouraging sign for governments and corporates having to navigate higher interest rates, and for countries needing to borrow more to back energy subsidies amid the spectre of central banks offloading massive bond holdings. But bankers that sell the debt remain cautious. January’s figures follow a year that saw the biggest jump in government borrowing costs in ...

The end of the easy-cash era is over and its impact yet to be felt on world markets, hopeful that the pain of aggressive rate hikes and high inflation has passed. U.S. and UK central banks are unwinding stimulus further by offloading bonds they hold, and the European Central Bank will join them soon. Nomura estimates the balance sheets of the three banks will shrink by $3 trillion this year. Tech stocks and crypto currencies look vulnerable. They are among risky assets that soared as cash pumped out by central ...

The bulls were in charge ahead of the European Central Bank and Bank of England’s first meetings of the year on Thursday, after the U.S. Federal Reserve bolstered the view that the surge in global interest rates was close to an end. Fed chair Jerome Powell’s message that a “disinflationary” process was taking hold had sent Wall Street up, the dollar down and kept Europe’s stocks 0.5% higher as the BoE and ECB loomed. Both are expected raise their mains rates by 50 basis points, but as with the Fed, ...

Chinese investors are starting to shift money from bonds to stocks, betting on a robust recovery for riskier assets as the government’s policy pivots to boost growth, the latest report on mutual funds showed. Foreign money has also been flowing into China equities, sending the benchmark index .CSI300 up 7.4% in January, although analysts say overall foreign positioning is still conservative and more could come. The shift in allocation towards riskier assets comes as China took measures to boost its economy, including dismantling its strict zero-COVID policy and supporting the ...

From stocks to government bonds, markets have had one of their best starts to the year in decades but whether the run lasts depends on a Goldilocks scenario of inflation easing, economic growth holding up and borrowing costs falling. After $14 trillion was wiped off world shares in 2022, $4 trillion has been added back this month. China’s relaxation of COVID-19 restrictions has powered Hong Kong’s Hang Seng Index .HSI to double-digit gains, while Europe’s Stoxx 600 share index enjoyed its best start to the year on record. Widespread optimism ...

Global stocks edged up on Wednesday as signs of slowing U.S. wage growth supported expectations that the Federal Reserve could signal an end to interest-rate hikes at its meeting later in the day. Wall Street indexes had rallied, as had bonds to a lesser extent, while the dollar gave up gains overnight when the Fed’s preferred wages gauge, the U.S. employment cost index, showed a 1% rise last quarter, its smallest increase in a year. The MSCI All-World index was last up 0.2% on the day, having ended January with ...