Daily Market Commentary 24th February 2024

Markets closed out a strong week of equity gains, with record levels in Europe and the USA. Share markets continue to exude confidence, despite recessionary economic conditions and inflation questions. Inflation in Europe is being addressed by driving the national economies into recession. The latest casualty is Germany, which confirmed a contraction of economic growth of minus 0.3%, for Q4. The deflation is welcome by share markets, as they see this as a precursor to interest rate cuts, the prospect of which drives the rally in equities. The coming week will be full of economic data reads of inflation and GDP growth, across Europe and the USA. The numbers will determine the market direction and drive Central Bank speculation. The EUR will open the week trading above 1.0800, while the GBP heads back towards 1.2700.

The currency markets have been relatively calm, considering all the action on equity markets, with the commodity currencies performing well. The AUD trades around 0.6550, while the NZD has overperformed, heading back towards 0.6200 ahead of this week’s RBNZ rate decision. The RBNZ is expected to leave rates unchanged, but any hawkish narrative, may well ensure continued support for the currency. Inflation and growth data remain key to market trading this coming week.