Published by Global Banking and Finance Review
Posted on February 21, 2025
A look at the day ahead in European and global markets from Rae Wee
Friday brings a slew of purchasing managers' index (PMI) readings as investors in Germany count down to a general election on Sunday following the collapse of Chancellor Olaf Scholz's three-way coalition.
The euro zone and Britain get February PMI figures ahead of the U.S. later in the day, which could start to show the impact of U.S. President Donald Trump's tariffs as businesses rushed to get orders out before they feel the blow of import duties.
Euro zone PMIs are expected to show a further expansion in growth, helped by a pick up in services and an easing of the long-running downturn in manufacturing.
The focus in U.S. figures will be whether the manufacturing sector's recent rebound into expansion is being sustained.
The UK is also due to release January retail sales data later in the day, with markets betting shoppers loosened their purse strings a bit last month after retail sales unexpectedly fell in December.
A survey published on Friday showed British consumers turned a little less pessimistic this month as the Bank of England's latest interest rate cut led to an improvement in expectations for their household finances.
Sunday's German election may result in a conservative-led coalition government that faces pressure for much-needed change to revive the stagnant economy - and moves to block reform by populist parties if they do well.
The conservative CDU/CSU bloc led by Friedrich Merz is tipped to win by polls but it will need a partner - or possibly two - to govern.
Ahead of the weekend, the euro was steady at $1.0501, helped by a weaker dollar that was on track for its third straight weekly loss.
In Asia on Friday, MSCI's broadest index of Asia-Pacific shares outside Japan struck a three-month high, boosted by a rise in Chinese stocks amid enthusiasm over technology and artificial intelligence (AI) companies there.
Hong Kong's Hang Seng Index surged to a three-year peak and the Hang Seng Tech Index is up nearly 30% so far this year, against a 4% rise in the S&P 500.
Investment banks have in recent days also turned more bullish on the case for investing in China, which would mark a significant change in mindset after years of pessimism.
Key developments that could influence markets on Friday:
- Euro zone, UK, U.S. preliminary PMI readings (February)
- UK retail sales (January)
- Federal Reserve Vice Chair Philip Jefferson speaks
- European Central Bank board member Philip Lane speaks
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