Is this just a correction? What will the week bring?

The first week of the new year was marked by a decline in the American stock market. After dynamic growth at the end of 2023, we can also observe weaker moods in Europe and Asia. Is this just a correction or maybe the beginning of bigger declines?

What promotes disinflation?

The past few days have brought a series of important macroeconomic readings, but they did not change much in the overall economic situation. The most famous report from the American labor market was very good, despite the downward revision of the readings from previous months. Data on economic activity brought several surprises - the readings on the activity of the British services sector and revisions of previous readings in the euro zone were certainly positive. However, in this respect too, the overall economic landscape has not changed significantly compared to the last weeks of last year.

However, there were also disappointments - the data on German retail sales was disastrous, which is not the best forecast for the situation in the euro zone. We also have the publication of the latest inflation calculations in the US, which will be closely watched by market participants. The most important thing for investors now is to be sure about the upcoming interest rate cuts in the US, while the no-recession scenario will come true.

At this point, many factors are supporting disinflation - from falling housing costs in the United States to still weak crude oil and the resulting low gasoline prices. However, US stocks remain relatively expensive - no matter what historical data we take into account. Another interesting fact is that in recent years, the first week was not the worst prognosticator for the rest of the year. About last week's decline.

In today's webinar:

• Will US inflation continue to decline?
• What do they tell us? macroeconomic data?
• Is this just a correction?

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

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