US stock markets rose in the beginning of the week, amid expectations for further fiscal stimulus
continued easy monetary policy, a better-than-expected Q4 earnings season, and progress in battling the coronavirus. Stocks pulled back on Thursday due to concerns regarding rising rates. Despite the recent rise in inflation, the fundamental outlook remains favourable, and the market’s high degree of optimism may not be misplaced.
On the economic front, jobless claims jumped to a four-week high, indicating the labor market is experiencing fresh setbacks even as the coronavirus pandemic shows signs of receding, Initial jobless claims totalled 861,000 last week, above the 773,000 estimate. In the U.S. retail sales accelerated sharply in January by 5.3%, well above consensus expectations for a 1.1% gain, backed by additional government aid paid out in December to fight the Covid effect. U.S. homebuilding tumbled in January amid rising lumber prices, though a surge in permits for future construction implied the housing market remains supported by lean inventories and historically low mortgage rates. Producer prices (PPI) increased by 1.3% MoM in January, marking the biggest increase since December 2009.
In Eurozone, the pace of Eurozone economic contraction decelerated in February. The latest PMI data revealed that business activity in the Eurozone dropped for a fourth consecutive month in February, although the pace of contraction slowed as a stronger-than-expected pickup in manufacturing offset a continuing decline in services.
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