The past few trading days have been dominated by the recent trade dispute between the US and China. Even the temporary settlement of the tariff dispute between the United States and Canada and Mexico is unlikely to have eased the associated uncertainty. Investors should now turn their attention to the publication of the official US labor market data at the end of the week.
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Fears of an escalating trade war between the US and China dampen risk appetite
Fearing an escalation of a trade war between the US and other major economies, investors ran for cover at the start of the trading week. US President Donald Trump announced punitive tariffs on Mexican, Canadian and Chinese imports into the US over the past weekend. However, following talks with the responsible parties last Monday, the tariffs were suspended for Mexico and Canada for 30 days. The Middle Kingdom responded immediately with counter-tariffs.
China data puts a damper on growth - EU inflation picks up surprisingly
There was also important economic data from China on Monday with the Caixin Purchasing Managers' Index for the manufacturing sector, which came in at 50.10 points, worse than expected (50.50 points), after 50.50 points in the previous month.
At 2.50%, EU consumer prices surprisingly rose again in January after 2.4% in December (year-on-year comparison).
Not least the recent tariff dispute initiated by Trump is likely to further fuel inflation concerns in the coming months. A renewed rise in inflation will give the ECB less powerful arguments to further lower the key interest rate.
US data with positive impetus - service sector in China weakens due to New Year holidays
However, new ISM data in the USA on the manufacturing sector provided positive impetus on Tuesday afternoon, with 50.90 points above the growth threshold of 50 points.
On Wednesday, as on Monday, it was the Caixin index for the services sector that investors had to digest. Due to the New Year holidays, this sector fell from 52.2 points in December to 51 points. Uncertainty over the trade dispute with the US is also likely to have weighed on sentiment.
ADP data surprisingly strong - disappointment from the US sector
The ADP employment data provided a first foretaste of today's publication of the Non-Farm Payrolls. At 183,000 units, these were well above expectations (150,000), after 122,000 jobs in December.
An additionally important ISM purchasing manager for the non-manufacturing sector also disappointed expectations (54.3 points) with 52.80 points. In contrast to the manufacturing sector, this area is therefore performing less well.
US job growth could slump according to economists - Google parent company disappoints with growth in sales and cloud
Economists expect an increase in non-farm payrolls of 170,000 units, after 256,000 new jobs were created in December. The unemployment rate is expected to reach 4.1%.
In the reporting season, the figures from Google's parent company Alphabet stood out in particular, which showed slower growth due to increasing competition in the online advertising sector. The increase in revenue in the cloud division, which was published on Tuesday, also fell short of expectations.
Alphabet share
Source: TradingView
Amazon cloud business weakens - retail flourishes
Online mail order company Amazon posted strong quarterly figures in the past quarter thanks to consumers' desire to shop. "The Christmas shopping season was the most successful ever for Amazon," said CEO Andy Jassy. However, business in the cloud division fell short of forecasts. The outlook for the first quarter was also disappointing.
Amazon share
Source: TradingView
