Highlights
After trailing behind the U.S. equity market in the past few years, European stocks are making a comeback having outperformed their U.S. peers so far. The European index was up 3.15% in the previous week boosting the year-to-date gains to 12.20% compared to just under 4% for the S&P 500. Hopes of an end to the Russia-Ukraine war and strong earnings reports buoyed sentiment along with the dialling down of negative implications of trade tariffs by the U.S. President after the President opted for reciprocal tariffs on a country-by-country basis as opposed to the global blanket tariffs that had been threatened earlier. However, higher than expected inflation prints across the developed economies continues to fuel higher-for-longer rate expectations.
Data highlights:
The January headline U.S. CPI rose by 0.5% month over month and 3.0% year over year coming in higher than the analyst expectations by 20bps and 10bps respectively. Similarly, January PPI data came in hotter than expected, advancing by 0.4% compared to an expected increase of 0.3%. Retail Sales data released on Friday capped this trend, coming in 0.5% points higher than expected at 4.2% growth year over year. Over in Europe, U.K. GDP grew by an unexpected 1.5% against analysts’ expectations of a 1% growth on a year over year basis. The Eurozone economy grew at 0.9% year over year which was in line with the consensus.
Week ahead:
Japan GDP – Monday | Australia Interest Rate, U.K. Unemployment Rate, Canada CPI – Tuesday | U.K. CPI, U.S. FOMC Minutes – Wednesday | Australia Unemployment Rate – Thursday | Japan CPI, U.K. & Canada Retail Sales – Friday.
Full Report:
