Technical recession looms large as markets brace for US Data

European futures point to cautious start

By Farah Mourad | 15 February 2024

Market open

The morning began with surprising news emerging from Australia, as January witnessed unexpectedly weak employment figures, leading to the highest unemployment rate in two years, signaling a potential slowdown in the job market. Data revealed a rise in the unemployment rate to 4.1%, surpassing forecasts and marking the highest level since January 2022. Similarly, Japan faced an unexpected economic contraction in the fourth quarter of 2023, with preliminary GDP data showing a 0.4% annual decline and a 0.1% quarterly decrease. This downturn was attributed to reduced spending by both households and businesses; USDJPY depreciated by to 150, marking an interesting shift in dynamics.

Stock Market:

Asian and Pacific indexes painted a mixed picture today after the data release, differing from yesterday's Wall Street session which ended on a positive note, with S&P 500 closing above the significant 5000 points mark and Nasdaq gaining 1%.

Meanwhile, futures contracts hint at a marginally lower opening for the European session, indicating cautious sentiment among investors in the region.

British Pound:

In the UK, GDP figures for December fell below expectations, causing a downward tick in GBPUSD. The actual GDP for the month stood at -0.1% MoM, diverging from the forecasted -0.2% MoM. Similarly, Q4 GDP figures disappointed, showing a -0.2% YoY change against an anticipated 0.1% YoY growth. This weaker-than-expected economic performance confirms a technical recession, might pressure the Bank of England to consider earlier interest rate adjustments.

US Data:

Looking ahead, investor focus will shift to US data on data with retail sales and industrial production for January coming today. Expectations suggest a month-over-month decline in January figures, with a smaller annual increase anticipated.

As the day progresses, market participants will keenly observe these developments, which could influence trading sentiments and strategies. Stay tuned for further updates as the day unfolds.