Daily Market Outlook, February 16, 2023

European Earnings Pump The CAC 40 To Join The FTSE At Record Highs

Asian equities are mostly in the green overnight following a positive close on Wall Street as investors digested data including much stronger than expected retail sales coupled with a robust read from the New York Fed Manufacturing survey. European markets are set to open up this morning with the FTSE continuing its march higher aided by British Gas owner Centrica, posting record profits and Standard Chartered Bank announcing a $1billion buyback programme, the CAC40 is also set to enter record high territory as Airbus and Renault post robust earnings.

There is no tier one econ data on the docket for UK or the Eurozone this morning, instead investors will focus on a bevy of central bank speakers, parsing commentary for additional information regarding rate policy across the regions. BoE Chief Economist Pill is first up, he recently remarked that he believed another increase in UK rates was the most likely next move from the MPC, markets are currently leaning towards a 25bps increase at the next meeting. The ECB President Lagarde also speaks later today additional ECB speakers on deck include Chief Economist Lane, Executive Board member Panetta and Bundesbank Head Nagel, the ECB have coalesced around a 50bps increase at the next meeting and have been explicit to the markets about this, commentary today will be eyed with respect to the future rate glide path in the Eurozone. The European Commission recently raised its growth forecast for the region to 0.9% for 2023 and lowered its inflation forecast to 5.6%.

In the US, investors continue to digest a busy data docket this week, with today’s producer price inflation, housing data, weekly jobless claims and the Philly Fed manufacturing survey the latest data dump. PPI inflation is pencilled to retreat to 5.4% in the annualised comparison, while initial jobless claims are expected to remain anchored at record low levels, suggesting continued tightness in the US labour market landscape. Housing starts are set to buck the positive data trend, they are expected to post another decline with the sector weighed by interest rate increases, while the Philly Fed is expected to post a marginally improvement in conditions, but ultimately remaining in contractionary territory. Investors will also eye comments from Fed officials Bullard & Mester set to speak on the US economic outlook later today.