New Delhi [India], January 10 : Global markets, in the week ahead, will keenly look for fresh inflation data and economic reports, S&P stated in its latest week ahead economic preview.
The report added that the upcoming cues will offer new insights into the state of the world's largest economies.
Investors in the global markets are looking for cues on the persistence of price pressures, especially amid ongoing bond market volatility, geopolitical tensions, and rising uncertainty surrounding central bank policies.
In major economies, an uptick has been seen in the inflation level, and fresh data for December will be eyed for signs as to whether the upswing has persisted into the year-end, the report added.
In US the headline consumer price index (CPI) rose for a second consecutive month in the US during November, lifting from 2.6 per cent in October to a four-month high of 2.7 per cent.
In the UK, a second successive monthly acceleration was also recorded in November, with the headline rate up from 2.3 per cent to an eight-month high of 2.6 per cent.
The eurozone's preliminary estimate for December has meanwhile seen headline CPI rise 2.4 per cent on a year ago, reaching a five-month high after having now accelerated for three successive months.
These increases in inflation in key regions have raised concerns that central banks may be limited in their ability to reduce interest rates in 2025, the report added.
Such constraints could be particularly problematic for the UK and the eurozone, where economic growth is already showing signs of slowing down, and where depreciating currencies could exacerbate inflationary pressures.
Adding to the uncertainty, the US is facing the potential inflationary effects of new tariffs and immigration policies, while rising labour costs in the UK may further strain businesses.
December's Purchasing Managers' Index (PMI) data has revealed an uptick in services inflation in all three major economies, intensifying worries over the inflation outlook. With inflation remaining well above central bank targets in the US, UK, and eurozone, investors are concerned about the limited scope for interest rate cuts, which could further destabilize bond markets.
As central banks face growing pressure, updated economic data will be closely monitored in the coming week.
Monthly GDP data for the UK and industrial production numbers for the eurozone are expected to offer critical insights into potential stagflation risksespecially in light of concerns over economic slowdowns in both regions.
In Asia, the focus will be on the fourth-quarter GDP report for mainland China. After reporting a slower-than-expected 4.6 per cent growth rate in the third quarter, the outlook for China remains uncertain, with PMI data throughout the latter half of 2024 signalling weakness in key sectors.
Investors are keen to understand whether the world's second-largest economy can regain momentum as it faces a challenging global economic environment.
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