NAB Morning Call Markets coast as politics turns to peace talks
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Feb 24, 2025 In this discussion, Sally Auld, NAB’s Chief Economist in waiting, shares her insights on market trends amidst a backdrop of geopolitical tensions. She highlights a rise in U.S. equities, despite soft economic indicators like the Dallas Fed Manufacturing Survey. Auld also delves into the implications of Germany's increased defense spending and Europe’s evolving stance on Ukraine. Additionally, she points to New Zealand's impressive retail sales as a sign of economic recovery, suggesting a cautious optimism for the markets ahead.
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Market Optimism
- Investors are buying the dip in the US stock market, showing optimism for the growth outlook.
- Despite softer data, markets maintain faith in the narrative of a strong US economy and earnings growth.
European Defense Spending
- Europe must increase defense spending following the German election and amid US-Russia negotiations over Ukraine.
- The outcome raises concerns about Europe's security and potential shifts in regional alliances.
German Economic Outlook
- Despite the German IFO survey showing slight economic improvement, the overall situation remains stagnant.
- The rise in business expectations offers a glimmer of hope, aligning with better news in recent PMIs.