Morning Offer Market hopeful awaits statement from Powell

Morning Offer: Market hopeful awaits statement from Powell

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

Investors have whetted their appetite for risky assets at the start of a crucial week, shaking off disappointment that China has set a modest target for economic growth for this year, with European equities set to drive the momentum.

After its best weekly year-to-date performance, the continental STOXX could be heading for another record high as traders await January retail sales data for the euro-zone later in the day.

Meanwhile, the market is firmly focused on Fed Chair Powell’s two-day testimony before the US Congress (Tuesday and Wednesday) and the February jobs report (due Friday), which are likely to dictate the Fed’s path going forward becomes .

While investors have now (a little) accepted that the Fed is likely to keep rates high for much longer, there are renewed fears that strong economic data will prompt the central bank to return to massive rate hikes.

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Fed spokesmen continued their hawkish rhetoric over the weekend, most recently San Francisco Federal Reserve Bank President Mary Daly warning of the risk of inflation.

The market is largely expecting Powell to be hawkish this week, but given his testimony ahead of the jobs report release, he will likely aim to keep his options open.

Over in China, the country’s leaders have set a target of 5% for economic growth this year, which analysts called conservative and pragmatic as they opened the annual session of the National People’s Congress.

In the corporate world, Italian state lender CDP has bid for the landline network of former telephone monopolist Telecom Italia, competing with an offer from US company KKR.

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Key developments that could impact markets on Monday:

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

Speaker: ECB Chief Economist Philip Lane

Reporting by Ankur Banerjee; Edited by Edmund Klaman

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