© Reuters
Written by Noreen Burke
Investing.com – A slew of data will be released this week in the US as well as inflation figures in the region providing more information on the path of interest rates in the near term. PMI data from China will also be released to indicate the success and impact of reopening the world’s second largest economy after the Lunar New Year holiday. Equity markets will be on the alert from the Fed’s hawks, with more retail earnings awaiting. Here’s what you need to know to start your week.
US data
Official data released last Friday revealed a strong recovery in consumer spending and inflation, reinforcing concerns about a “no-downside” economic scenario in which strong growth keeps inflation high and prompts the Federal Reserve to keep interest rates higher for longer.
Investors will get new insights into the strength of the economy this week with a slew of data due, including reports on , and. The February report will be released on Wednesday and Friday, respectively.
Tuesday’s consumer confidence data could be of particular interest, as it provides a glimpse into households’ opinions on the economic outlook and inflation expectations. Economists expect a slight rise to 108.5 after the index fell unexpectedly in January.
It’s set to be a quiet week for Fed speakers with Governor Chris’ speech on the economic outlook on Thursday being the main highlight.
hard landing?
After a strong performance in January, stocks have fallen this month as a raft of economic data fueled expectations that the Fed will need to push interest rates higher and keep them higher for longer than before.
Wall Street’s major indexes posted their biggest weekly drop in 2023 after sharp losses on Friday. For Mumtaz, the 3% drop was its biggest weekly decline since (September). The index and decreased by 2.7% and 3.3%, respectively.
Loretta Mester, President of the Federal Reserve Bank of Cleveland, said on Friday that the Fed should raise interest rates too high if necessary to fully bring inflation under control.
However, if the data in the coming days indicates that growth and inflation remain strong, the stock and bond markets may head lower.
Eurozone inflation data
While a 50bp rate hike at the next ECB meeting in mid-March is almost certain, what happens next is still being discussed, so this week’s preliminary data on inflation in the Eurozone will be closely watched.
Preliminary data for February from , , and , is due on Tuesday and Wednesday, followed by a figure for the entire Eurozone on Thursday.
Price pressures ease: Annual inflation in the bloc eased to 8.6% in January from 9.2% in the previous month, but focus is likely to remain on core inflation, which excludes volatile food and energy prices. Annual core inflation is expected to reach , which matches January’s reading.
With inflation still well above the ECB’s 2% target, Thursday’s numbers are unlikely to satisfy the hawkishness of ECB officials who are pressing for continued rate hikes.
China data
Wednesday’s data will give investors an insight into how China’s economy is reopening, as initial indications point to a pickup in consumer activity during the Lunar New Year holiday.
The upbeat data could revive some enthusiasm for reopening trade – as optimism seems to be fading. The blue-chip CSI 300-share index has been largely flat for the month after surging 7% in January.
Growth in the world’s second-largest economy slowed to one of the worst levels in half a decade in 2022 due to strict COVID-19 lockdowns and restrictions, before Beijing abandoned its strict no-Covid policy.
More retail profits
Earnings results from major retailers next week will give more insight into the state of consumer spending and the impact on company earnings from inflation.
Retailer Target ( ) is scheduled to release a pre-opening report on Tuesday. Retail retailer Tree (DLTR}) is timed to release a pre-opening report on Wednesday, along with home improvement chain Louise ().
Thursday will see Macy’s (NYSE:) (8945 }) and Best Buy ( ) report before the market open, while Nordstrom ( ) and Costco ( ) will release results after the close.
It is reported that the results of ( ) and ( ) revealed last week that shoppers reduce spending amid rising prices.
Last fiscal year sales at Target are expected to rise 2.7%, according to estimates, well below the 6.7% rise reported by Walmart.
Lowe’s can feel a bigger crunch than its larger rival, Home Depot, as Lowe’s tends to attract more do-it-yourself shoppers than professional builders and inflation-proof contractors.
