Market sentiment has improved in European morning trade after a slow start. Stocks are gaining momentum, with US futures reducing earlier losses, while European indices have also risen, with the DAX up 0.2% and CAC 40 up 0.3%.
As the day progresses, key indicators such as US PPI and weekly jobless claims data will be monitored. Additionally, discussions between the US and Russia regarding Ukraine will take place, alongside lingering effects from previous market sell-offs. Focus is gradually shifting to the upcoming FOMC meeting next week, which could further influence market dynamics.
Market Recovery In Focus
With markets recovering from their earlier sluggishness, traders will be assessing how long this renewed confidence lasts. European indices are holding in positive territory, while US futures pare back losses from overnight trading. This shift in sentiment suggests an effort to stabilise after recent volatility, but whether this momentum holds will depend on upcoming data and geopolitical discussions.
We will be looking closely at US PPI figures and weekly jobless claims, both of which have the potential to shift expectations ahead of next week’s FOMC meeting. A higher-than-expected rise in producer prices could reinforce concerns that inflationary pressures remain persistent, prompting adjustments in rate expectations. Meanwhile, jobless claims will offer insight into the labour market’s resilience, a factor central to the Federal Reserve’s tightening outlook. Any deviation from forecasts could fuel speculation on the policy path ahead.
Beyond economic indicators, dialogue between Washington and Moscow regarding Ukraine will remain in focus. With markets skittish over political tensions, any statement emerging from these talks may inject further volatility. The overhang of previous sell-offs continues to weigh on sentiment, and traders will be wary of any resurgence in risk aversion. Short-term positioning is likely to be reactive, with liquidity conditions susceptible to sudden shifts.
Federal Reserve Policy Outlook
Looking ahead, attention is turning towards the Federal Reserve’s impending decision, as markets gauge whether policymakers will maintain a firm stance or signal any adjustments. The approach to tightening remains a core question, and markets will be sensitive to any hints in forthcoming speeches or data. With recent price swings reflecting the fragility of sentiment, positioning will likely shift as new information emerges.
