Morning Offer: Market Hopeful Awaits Powell Testimony

A look at the day ahead at European and global markets from Ankur Banerjee

Investors found themselves craving risky assets at the start of a pivotal week, shrugging off disappointment that China has set a modest target for economic growth this year, with European equities set to carry the momentum.

After its best weekly performance since the start of the year, the continental STOXX may be aiming for another all-time high as traders await January retail sales for the euro zone later in the day.

Meanwhile, the market’s focus is firmly on Fed Chairman Powell’s two-day testimony to the US Congress (on Tuesday and Wednesday) and the February jobs report (expected on Friday), which are likely to set the path of the US Fed for the foreseeable future. will dictate the future. .

While investors have come to accept (a little) that the Fed is likely to keep interest rates high for longer, there are new fears that strong economic data will push the central bank back to jumbo hikes.

The hawkish rhetoric from Fed speakers continued over the weekend, with San Francisco Federal Reserve Bank President Mary Daly finally issuing a warning about the inflationary threat.

The market largely expects Powell to be aggressive this week, but since his testimony comes before the jobs report is released, he will likely try to keep all options open.

In China, the country’s leadership set a 5% target for economic growth this year, which analysts called conservative and pragmatic, as they kicked off the annual session of the National People’s Congress.

In the corporate world, Italian government borrower CDP has made a bid for the fixed-line network of former telephone monopoly Telecom Italia, matching an offer from US firm KKR.

Key developments that could affect markets on Monday:

Economic Events: Eurozone Retail Sales January, February S&P Global PMIs for Germany, France and Eurozone

Speakers: ECB Chief Economist Philip Lane

Reporting by Ankur Banerjee; Edited by Edmund Klamann

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