Investors Brace for Another Rollercoaster Week

A standoff between Russia and Ukraine will dominate again the markets with Moscow changing the rhetoric on a daily basis and Washington continuing to give warnings of an impending invasion. On the data front, Markit services and manufacturing PMI’s from the US, UK, Germany, France, Euro Area and Japan will be in the spotlight. In the US, investors will again be looking for signs of whether the Federal Reserve would turn more hawkish.

The crisis on the Ukrainian border will remain in the spotlight, with the situation on the ground becoming more unstable by the hour. A Mosow-backed separatist in Donbas declared a full military mobilisation on Saturday, after ordering the evacuation of civilians to Russia the day before. Meanwhile, US Secretary of State Antony Blinken is expected to meet Russian Foreign Minister Sergei Lavrov next week for further diplomatic efforts to solve the conflict.

In the United States, flash Markit PMIs will provide an update on the economic activity in February and the PCE report due Friday is likely to show a rebound in spending in the first month of the year. On the price front, core PCE inflation is expected to accelerate to 5.2% from 4.9% in December, raising the odds again the Fed will deliver a 50bps increase in the fed funds rate in March. Also, the second GDP estimate is expected to show an upward revision in Q4 growth to 7% from an initial 6.9%. Other housing indicators including the Case-Shiller home prices, FHFA housing index, pending and new home sales; durable goods orders; the final Michigan consumer sentiment estimate; and the CB consumer confidence will also be in the spotlight. On the earnings front, Berkshire Hathaway, Home Depot, Macy’s, Lowe’s, Footlocker and Moderna are among companies due to report quarterly results next week. US markets will be shut on Monday for Presidents’ Day

Elsewhere in America, it will be worth following preliminary Canada manufacturing and wholesale sales; Brazil unemployment rate; Mexico mid-month inflation, final GDP growth for Q4 and trade balance; and Colombia monetary policy decision.

In the United Kingdom flash readings of Markit PMI are expected to show manufacturing growth slowed to a 1-year low in February while the services sector likely expanded by the most in seven months following the lift of some Omicron restrictions. The Gfk consumer confidence, public sector net borrowing, and the CBI gauge for factory orders and distributive trades will also be in the spotlight. On the corporate side, investors await 2021 results from big banks including HSBC, Barclays and Lloyd, as well as Rolls-Royce’s annual results.

Elsewhere in Europe, flash Markit PMIs for the Eurozone, Germany and France are likely to point to another month of growth in the private sector in February due to improvement across the service sector and broad stability in manufacturing activity. Meanwhile, both German GFK consumer confidence and the Ifo business climate indicator are set to improve for the second month. Other data to follow include: Eurozone final inflation figures for January and business survey; Germany Q4 GDP update, producer prices and import prices; and France preliminary consumer price data for February, final Q4 GDP and the jobs report.

In China, The PBOC is expected to leave its benchmark lending rate unchanged on Monday. Also, the release of Alibaba’s quarterly results on Thursday, will be highly monitored, given the fact that the stock has lost roughly 54% of its value over the past year. Elsewhere in Asia, there will be a fresh PMI reading for Japan, Thailand’s full-year and Q4 GDP, and interest rate decisions by Israel and New Zealand’s central banks.