Marketmind: Heading for a soft landing?

A look at the day ahead in European and global markets from Ankur Banerjee

While the European corporate earnings season still has a way to go, results so far have left investors hopeful that the region may well be able to weather the storm that’s combining inflationary pressure and economic slowdown. Things are not as bad as some had feared, with the region’s prospects boosted by China’s reopening, an unexpectedly mild winter and resilient activity data.

These hopes have lifted the pan-European STOXX 600 index, which is up 6.4% for the month and is set for its best January performance since 2015.

Over in Asia, the return of Hong Kong markets helped lift MSCI’s broadest index of Asia-Pacific shares outside Japan to a fresh seven-month high, with gold hovering at a nine-month high and the dollar wallowing at an eight-month low.

Investors’ focus is on next week’s set of central bank meetings as the U.S. Federal Reserve, European Central Bank and Bank of England decide on their rate-hike paths. Now that one of the major central banks, the Bank of Canada, has said it will pause interest rate hikes for now, traders are hopeful that the Fed (and to some extent the Bank of England) will be next.

GRAPHIC – Bank of Canada signals pause

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Meanwhile, Thursday’s earnings report from LVMH will underscore just how important China’s reopening is likely to be for the luxury industry. It remains to be seen whether revenge shopping from Chinese consumers will provide the fillip the industry has been pining for.

Speaking of earnings, Tesla’s aggressive price cuts paid off, igniting demand for its EVs and helping the carmaker beat Wall Street targets for fourth-quarter revenue and profit.

GRAPHIC – Tesla Earnings

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Key developments that could influence markets on Thursday:

Economic events: Sweden’s consumer confidence data for January, U.S. GDP data.

Earnings: LVMH, Nokia, STMicroelectronics, Diageo and Volvo  in Europe; Blackstone, Mastercard, Southwest Airlines, Intel, and Visa among others in United States.

(Reporting by Ankur Banerjee; Editing by Bradley Perrett)