A worrying start on the busiest day of the week

A worrying start on the busiest day of the week
Market Outlook
Ahura Chalki
Author:
Ahura Chalki
Published on: 21.02.2023 07:46 (UTC)
Post reading time: 1.92 min
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We will have a busy Tuesday with PMI numbers from Europe and the US and Canadian inflation data. We are optimistic about most of these data results as lower energy prices in the past months can be a good driver for the global economy. Expected data can have a short-lived positive effect. 


Yesterday US market, due to President's Day, was closed. However, we had many geopolitical tensions in the US and Korean peninsula. Asian market also reacted negatively after North Korea launched two ballistic missiles into the sea near Japan's west coast. On the other hand, the US futures market also was not encouraging as recently published inflation numbers increased the recession fears. Most Fed officials also have released hawkish remarks in the past two weeks. This could indicate that the peak of US policy interest rates will likely be higher than expected. In fact, central bank monetary policy affects the economy with a lag, typically one to two years, so we still have a long time ahead to face the results of decisions made so far. 


Today in the European session, we will have the initial PMI data for February. The market expects the manufacturing PMIs in the Eurozone, Germany, and France to perform better than last month, and have a slight rise, even if they can still stay under the expansion territory. Regarding the service sector, PMIs could have a better conditions by rising above the 50-level. Same in the UK, the market expects its manufacturing and service industry PMI to record 47.4 and 49.2, respectively, better than the previous months' numbers ​​of 47.0 and 48.7. 


During the North American session, Canada will publish its January inflation data. The market is expected to record 6.1% year-on-year, lower than the 6.3% of the previous month. We expect a raise on a monthly scale, as we saw in the US. We expect a 0.7% price rise, while inflation fell by -0.6% last month. Regarding core CPI, the data can show 5.4% year-on-year in December and -0.3% month-on-month. 


Before ending the day, we are also waiting for the US PMI numbers. US manufacturing PMI is expected to record 47.3, higher than 46.9 in January, and the service PMI is expected to record 47.5, which is also better than 46.8 in January. Expected Service and Manufacturing PMIs would push the Composite PMI to 47.2, up from 46.8.

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