Last week witnessed an escalation in the Middle East tension with the US and UK conducting airstrikes against Houthi rebels. The dollar index hovered around 102, while conflicting inflation data led to a retreat in dollar bulls. Bitcoin experienced an unexpected plunge below $42,000, possibly triggered by Grayscale's fund movement and concerns of ETF redemption. Gold stabilized around $2,050 amid heightened geopolitical risks. Brent crude fell by 0.5%, WTI by 1.1% due to concerns over disruptions in oil supply.
Major US stock indices showed modest gains. The Dow Jones rose by 0.34%, the S&P 500 by 1.84%, and the Nasdaq outperformed, closing up by 2.09%. In the bond market, US Treasury yields declined, and traders are anticipating a potential rate cut by the Fed in March.
Outlook for the Week:
Inflation remains a focal point, and the Davos World Economic Forum might bring positive sentiments to investors. Despite robust December employment and inflation data in the US, markets are still pricing in a 150-basis-point rate cut by the end of 2024. Retail sales, ISM manufacturing report, and the Fed's Beige Book will be closely watched.
Global stock markets and the Australian Dollar, representing Chinese risk sentiment, may rise due to stronger-than-expected growth in the world's second-largest economy. Australia's employment data will also be crucial. Meanwhile, the focus will be on important events and economic data releases.
Key Events and Economic Data Overview (Beijing Time):
- Tuesday: Bank of England Governor Bailey testifies, China National Economic Briefing.
- Wednesday: Speech by Fed Governor Waller, Eurozone ZEW Economic Sentiment, Canada CPI.
- Thursday: ECB President Lagarde speaks at Davos, ECB Monetary Policy Meeting Minutes, Speech by FOMC voters, Atlanta Fed President Bostic.
- Friday: Speech by ECB Chief Economist Lane, Speech by FOMC voter, Minneapolis Fed President Kashkari.