Market snapshot: an important week for stocks worldwide

Markets enter another important week on the front foot, while also mindful that any unexpected shocks are likely to be punished.

This week will herald a raft of economic data, as the Federal Reserve, European Central Bank and Bank of England all reveal their latest interest rate decisions, while there is also an important update due on the latest US inflation picture, as well as UK GDP and US retail sales.

• Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA

Leading into the week, the latest data is tending to keep hopes alive of a soft landing in the US economy.

Friday’s non-farm payrolls report showed an unexpected fall in the unemployment rate to 3.7% from 3.9%, while the headline number of 199,000 jobs added was slightly ahead of estimates. Perhaps equally importantly, average hourly earnings were up but in line with expectations, keeping at bay for the time being concerns that strong earnings growth could add upward pressure to the rate of inflation.

At the same time, a closely watched survey revealed a jump in consumer sentiment, an element vital to US economic growth. This data also suggested that inflation expectations had fallen, adding more significance to the latest release tomorrow.

However, all things considered and given the ongoing resilience of the economy, the consensus has now switched in terms of the timing of the first interest rate cut next year, which is now expected in May as opposed to previously having been priced in for March.

The Fed’s interest rate decision and accompanying comments will be of particular interest to investors, especially given the recent rally in stocks on optimism of an end to the hiking cycle and the gradual move towards monetary easing.

Another positive week added to the gains made of late, such that the Dow Jones is now ahead by 9.4% in the year to date, the S&P500 20% and the Nasdaq 38%.

• Richard Beddard: is this impressive company a bargain?
• How to beat the market: five value stocks that make the grade
• Stockwatch: taking a stake in this challenger bank looks a good strategy

Asian markets were mixed to lower, as caution ahead of this week’s data added to some conflicting signals locally. For Japan, the Nikkei remains volatile on speculation that the central bank’s easy monetary policy regime could be nearing an end, putting particular pressure on the Yen.

In China, meanwhile, there were reports that spending boosts were on the table in an effort to help the economy, although such details were too sparse to spark any sort of rally. In the meantime, consumer prices showed their sharpest drop in three years, pouring more cold water on hopes of any immediate economic bounce.

UK markets were again languid in the face of the economic developments unfolding around them on the global stage. The premier index drifted in early exchanges, with Anglo American (LSE:AAL) topping the loser board after being buffeted by a raft of broker downgrades.

Indeed, miners in general were weak on both the uncertainty of demand in China as well as a general drift towards a risk-off approach from investors. The FTSE100 is now up by 1.3% in the year to date, with any cautious gains remaining brittle.

• Nick Train analyses his trust and names the stock he’ll buy more of
• Falling interest rates will trigger a small-cap recovery
• Two UK small-caps we are excited about

The FTSE250 has had a minor relief rally over recent days, reducing the deficit in the year so far to being down by 0.8% after a torrid few months. The unlikely resilience which the UK economy has shown has continued to defy the naysayers, notwithstanding the fact that economic growth and the restrictions of central bank policy will both be updated this week, either of which could cause further upset.