Weekly fundamental outlook for global stock indexes and most global asset markets.
See here for our Global Stocks Weekly Technical Outlook.

Fundamental Picture: Lessons & Top Market Drivers For This Week

Everything that has real influence over global asset prices and rates these days falls into one of three categories:

1. Economic data from the US, Europe, or China (ok, occasionally Japan or the UK).
2. Speculation about changes in policy, and ultimately, benchmark interest rates, from one of their central banks.
3. Geopolitical tensions, with the Russia/Ukraine conflict the only one seen as having potential to really hurt the global economy, mostly through the damage it does to the already shaky EU. Mideast turmoil hasn’t affected energy prices and the “China versus all of its neighbors” tensions remain on slow simmer, so both remain irrelevant for investors.

The Lesson: Central Bank Policy Sentiment Overriding, Data, Ukraine Crisis Implications

Looking at last week’s price action in global equities, one big screaming lesson stands out that everyone needs to learn. Speculation on major central bank policy changes, particularly from the ECB, Fed, and PBoC, (and thus key data most likely to influence them) is overriding all else.

Last week’s data should have global indexes, at very least in Europe. Ditto Russia’s now overt direct invasion of Ukraine. Yet the only thing that moved most global indexes was rising speculation of new ECB easing.

This isn’t so surprising. Last week’s data merely confirmed and supported the current outlook for the major economies. New economic sanctions against Russia appear to be coming, but the West remains vague on both their timing and extent. So markets have reason to doubt if and when these will materially impact anything.

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