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The Week Ahead: will inflation fears impact vaccine recovery optimism?

We start the trading week on a very positive note, after some good gains on Friday night from European and US indices, most of them up between 0.5 and 1%. We've also seen good support as well for industrial commodities.

It’s clear that vaccine optimism and the outlook for economic recovery this year is the key driver of markets, with many indices reaching once again for all-time highs. So, we’re expecting to see further positive momentum across this trading week as investors express their positive outlook for the global economy.

Inflation, however, remains one of the key risks and reads on UK inflation early this week and then Japan later in the week, could influence the flow of trading, particularly if it has an impact on the bond market outlook and pushes those important bond yields any higher. So key growth coming through but some key risks in those inflation regions. As we get towards the end of the week, we’ll also get more activity reads, particularly in Europe with the PMIs for the month starting to come through.

But the trader’s focus this week is likely to be cryptocurrencies, after the listing last week of the US cryptocurrency exchange Coinbase. The focus remains very much on the volatility we’re seeing in that sector. Bitcoin had a very wild weekend, dropping to almost $51K USD, well back from those highs of $65K USD, however, in early trading on Monday it has bounced back to around $56K USD, so it does look like we’re going to see further movement in the cryptocurrency space. For all the latest, including cryptocurrency charts, log in to our Next Generation platform.

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