This week will see markets enter a phase of anticipation ahead of Donald Trump's inauguration as the 47th President of the United States. Key economic releases in Europe and Central Europe will also provide insight into regional recoveries, while US markets remain quiet in the lead-up to the Federal Reserve's next meeting on 29 January.
Photo: Dreamstime.
In the United States, markets are in a holding pattern with no significant data releases scheduled and the Federal Reserve entering its communications blackout. Although the Fed cut its policy rate by 100 basis points in late 2024, analysts expect no further rate adjustments this month due to stable growth, steady inflation, and a cooling labour market. The spotlight will turn to politics as Trump's presidency begins. Analysts are divided on whether he will prioritise tax cuts or focus on tariffs and immigration policies.
Europe's outlook remains uncertain, with upcoming sentiment data and purchasing managers' indices expected to confirm the economic challenges seen in late 2024. Survey results could reflect continuing stagnation, as recent PMIs have remained below 50 since September, indicating contraction. Analysts expect growth prospects for early 2025 to remain subdued.
In Poland, December's data is anticipated to show gradual economic recovery, supported by calendar effects and robust car sales ahead of new EU emissions rules. However, industrial output is projected to remain stagnant year-on-year. Retail sales are likely to recover further, while double-digit wage growth continues despite seasonal upticks in unemployment.
Hungary's labour market data for November and December is expected to reveal sustained wage growth and rising household purchasing power. Yet, a high propensity to save and rising unemployment have kept consumer spending in check. Analysts point to cautious consumer sentiment as a major factor.
In the Czech Republic, consumer confidence has likely improved slightly, driven by real wage growth, but industrial unease and ongoing layoffs continue to weigh on sentiment. While optimism linked to Germany's political outlook and potential European Commission measures in the automotive sector could offer hope, businesses remain wary.
Turkey is expected to continue its aggressive interest rate cuts, with the central bank likely to reduce rates by 250 basis points to 45%. Positive inflation signals are driving the move, but analysts caution that the financial environment could tighten further if the central bank fails to act decisively.
In Azerbaijan, interest rates are expected to remain stable at 7.25%, with inflation trends aligning with forecasts. Meanwhile, Uzbekistan's central bank is also expected to hold its policy rate at 13.5%, as inflationary pressures remain elevated due to utility tariff increases, fiscal loosening, and currency depreciation.
As global markets await Trump's policy directions and economic indicators provide fresh signals, the coming week promises to shape sentiment for the months ahead.
More information:
ING
www.think.ing.com