A look at the day ahead for European and global markets from Brigid Riley
It’s Friday – and the start of a new month – and the much-anticipated US non-farm payrolls have finally bottomed out with a barrage of manufacturing data, ending a week of mixed economic reports that also included an upside surprise from China.
The US labor market is still tight, with the Federal Reserve looking for more signs of cooling, though not quite as the central bank tries to achieve a soft landing.
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Markets estimate only a one in ten chance of a rate hike at the Fed’s next meeting in September, but uncertainty remains about the rest of the year.
Fed officials aren’t making forecasters’ jobs any easier with their increasingly diverse comments, although a couple are set to speak again on Friday and may offer fresh clues on the mood inside the US central bank.
Meanwhile, a pleasant surprise emerged from China, where a private sector survey showed factory activity in the world’s second-largest economy ticked back into broad territory.
However, it is too early to celebrate a major turnaround in recent trends, as the property sector and weak household consumption are still weighing heavily.
China’s economic troubles prompted the country’s three biggest banks to cut interest rates on various deposits on Friday in an effort to ease some of the pressure on their margins.
China’s stock market shrugged off its recent disappointment in the Asian morning, led by blue-chip index (.CSI300) real estate (.CSI000) and financial (.CSIFN) sub-indices.
The parade of PMI data continues, with surveys from several countries in the euro bloc due on Friday.
The euro area’s final PMI will be in focus after the survey last month showed manufacturing activity slowing at its fastest pace since the start of the pandemic.
It looks like this month’s data could add additional fuel to the ongoing ‘will-they-won’t-they’ debate over the rate scenario in Europe, with members of the European Central Bank warning markets on Thursday that rates could rise further. There is potential for growth.
Major developments that may affect the market on Friday:
-US August Non-Farm Payrolls and Unemployment Rates
Spain July International Tourist Arrivals
– August Final PMIs for Euro Zone, Spain, Switzerland, Italy, France, Germany, Sweden, UK, US
-Italy Final Q2 GDP and July Producer Prices
Fed’s Biostik and Meister to speak at separate events
Reporting by Brigid Riley
Our Standards: The Thomson Reuters Trust Principles.
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