Global financial markets exhibited a mixed performance this week as investors navigated through a series of economic data releases, political developments, and central bank policies. The European Central Bank's (ECB) representative from Belgium, Wunsch, suggested that the key interest rate might no longer be restrictive if it is reduced to 2.50%. This statement comes as treasury yields hovered near 4.4%, with markets pricing in potential Federal Reserve rate cuts in response to softening Purchasing Managers' Index (PMI) data.
In geopolitical affairs, a spokesperson for the Russian government announced upcoming talks with the United States aimed at eliminating irritants in bilateral relations. This dialogue is scheduled for later this week and is seen as a crucial step in easing tensions between the two countries.
In Germany, coalition talks between the CDU/CSU alliance and the Social Democrats appeared promising, leading to a rise in the DAX index. Meanwhile, Japan's markets remained closed for a public holiday, pausing trading activities in the region.
In the United States, futures rose modestly following last week's selloff, where the Dow Jones Industrial Average experienced its worst week since October 2024 with a drop of 2.5%. This rebound comes as investors anticipate the release of Personal Consumption Expenditures (PCE) data, Nvidia's earnings report, and a potential announcement regarding the release of GPT-4.5.
Poland reported better-than-expected real retail sales figures for January, with month-over-month sales declining by 17.3% compared to an expected 19.8% drop. Year-over-year sales increased by 4.8%, surpassing expectations of 1.5%. Retail sales at current prices also grew by 6.1% year-over-year, against an expected rise of 2.5%.
The European Union announced plans to sell a combined €5.0 billion in Next Generation EU (NGEU) bonds maturing in 2027 and 2038, reflecting ongoing efforts to finance recovery initiatives across member states.
In Canada, Bank of Canada Deputy Governor Gravelle delivered a speech at 08:15 local time, while in South Korea, the Bank of Korea was expected to maintain its seven-day repo rate at 3.00% during its interest rate decision meeting scheduled for 20:00 local time.
In commodity markets, gold prices increased by 0.3%, while the US Dollar Index (DXY) remained unchanged. Brent and West Texas Intermediate (WTI) crude oil prices both edged lower by 0.1%. In the cryptocurrency market, Bitcoin declined by 0.4%, and Ethereum saw a more significant drop of 3.9%.
European indices exhibited varied performances, with gains ranging from 0.1% to 1.0%. The Euro started the session above the 1.05 level against the US Dollar following the German Federal elections but drifted lower during a quiet European morning as traders anticipated that the ECB's loose monetary policy stance would limit any significant appreciation of the euro.
The DAX index rose amid positive coalition talks in Germany, while US futures rebounded ahead of key economic data releases and corporate earnings reports. The Stoxx600 index increased by 0.19%, closing at 554.90 points, while the FTSE index rose by 0.30% to reach 8,685.20 points. The DAX index climbed by 0.98% to finish at 22,483.35 points, whereas the CAC-40 index slipped by 0.14% to close at 8,143.22 points. The IBEX-35 and FTSE MIB indices both saw gains of 0.55% and 0.21%, respectively, closing at 13,022.47 and 38,503.00 points, respectively. The Swiss Market Index (SMI) rose by 0.39% to end the session at 12,986.60 points, with S&P 500 futures up by 0.55%.
The financial landscape remains dynamic as market participants closely monitor economic indicators and political developments across regions.