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Friday Recap

Equities in Europe closed with losses on Friday as reports the United States will consider additional tariffs aimed at China stoked fears of a trade war. President Donald Trump instructed his trade representative to consider an additional $100 billion worth of tariffs on Chinese goods, provoking a stark warning from Beijing. On the other hand this was good news for precious metals, which gained over the current global trade tensions, geopolitical tensions and short-term health of the Global economy, especially the United States.

This Week

The week sees economic news that should provide insights into central bank thinking in the US, UK and Eurozone, as well as Asian trade and price trends. We also have full-year numbers from Tesco, providing insight into the UK grocery sector. Meanwhile, the economic calendar is dominated by consumer price index (CPI) reports from the US and China, and by the latest set of Federal Reserve (Fed) minutes.

An updated US inflation data will also generate much market interest, and could provide important guidance on the path of policy tightening. Recent data, such as personal consumer expenditure prices and survey data, have indicated that inflationary pressures are building. Many economists are also concerned that recent policy measures, including fiscal stimulus and tariffs, could push US inflation higher this year.

Meanwhile, US earnings season is upon us once more, with the blizzard of earnings beginning midweek. But, as ever, it is the banks on Friday, namely Citigroup, JP Morgan and Wells Fargo that will really signal the start of things.

In Europe, the Eurozone policymaking also remains under the spotlight. PMI survey data showed the economic expansion losing some steam so far this year, but growth remains encouragingly solid and price pressures elevated. Official data on inflation and industrial production will therefore be gleaned to add further colour to the economic picture and help gauge the ECB’s appetite to start reining in its stimulus.