Thomas Watts, Investment Analyst, abrdn MPS, comments on the economic data releases this week;
“Following Chinese Manufacturing numbers and the results of the first round of French parliamentary elections today also brings with it monthly German prelim inflation numbers. With Germany being the largest economy in the Eurozone, its inflation data should help gauge what the overall reading should be for the wider bloc. With the European Central Bank (ECB) having cut interest rates only a few weeks ago, Monday’s data could prove pivotal in helping when the those in Brussels could make a further move.
Staying in Europe, we also have a press conference from Christine Lagarde, the President of the ECB, who is due to speak at a Forum on Central Banking, in Sintra. With all that will have happened in Europe during the beginning of the week, it will be interesting to hear her views on events and the views of the central bank, not only on current politics but also future rate policy.
On domestic shores, the second half the week will be characterised by the General Election as the country heads to the polls. Having enjoyed a sizable majority in the polls for the entirety of the run in, financial markets have long since settled on a comprehensive Labour victory, with the results of the election likely to cause little in the way of volatility. However, if we do see a reduced majority or much less of a mandate for Labour to pass legislation with, the uncertainly this could produce could rile markets in the short term.
As ever, the first Friday of the month brings US Non-Farm Payroll data. A key piece of information when determining the US central bank’s thinking on inflation, the employment data itself will be accompanied by Average Hourly Earnings, allowing us to more accurately gauge future demand expectations as the more consumers earn, the more they tend to spend. It all combines to be a vital piece of data for the Fed and should take on added significance, considering the extra impetus put on such data going forward from US central bank officials.”
