Nomura – The Week Ahead
The Week Ahead – Risk Sentiment Intact, For Now
Feb 21, 2025
Market sentiment is surprisingly robust, with equity markets holding steady despite geopolitical tensions. Focus shifts to U.S. inflation data and political developments, while Europe grapples with election outcomes and military spending demands. In Asia, central banks are set to meet, with implications for monetary policy and economic growth as China’s PMI data looms. Meanwhile, India's GDP growth is projected modestly, raising differing perceptions of its economic health.
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Quick takeaways
- Despite a generally robust market sentiment and healthy equity levels, caution is warranted due to potential volatility from upcoming investigations into Trump’s policies.
- The German elections may significantly influence Europe's fiscal policies, particularly regarding government investment and defense spending amid current political tensions.
Deep dives
Trade Relations and Market Dynamics
A new trade deal with China is being presented as possible, thanks in part to President Trump's positive relationship with Xi Jinping. While Asian stocks are trending lower, overarching market sentiment remains robust with equity markets holding healthy levels alongside tight credit spreads. The current geopolitical landscape indicates heightened hopes for peace between Russia and Ukraine, particularly as tariff concerns have eased recently. Despite this optimism, there are warnings that the markets may be too complacent regarding Trump's policies, especially with upcoming investigations that could stir volatility.
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