Huge uncertainty

Uncertainty sums up the feeling in the markets at the moment and that is perfectly highlighted by the moves seen on the opening day of the week.

Equity markets in Asia were a mixed bag, with the Shanghai Composite and Hang Seng making decent losses while those elsewhere made steady gains. Europe is slightly in the green as we move towards the close while the US is a sea of red, with tech shares being hit particularly hard.

There’s going to be a lot to take in this week, from the Fed on Wednesday, to the jobs report on Friday, BoE on Wednesday, earnings season, and much more. Perhaps it’s not surprising to see some jitters creeping back in.

A troubling period for the eurozone

The data this morning won’t have helped to settle the nerves. Europe is facing a highly uncertain few months as it navigates an uncertain winter in which a long bout of cold weather could take the economy down. And even before it the cracks are not just appearing, they’re getting larger by the day.

Inflation hit a new record high of 10.7%, well ahead of expectations, while the core reading unexpectedly jumped to 5%. Meanwhile, growth in the third quarter almost ground to a halt at 0.2% and that’s unlikely to significantly improve any time soon. Needless to say, the hardest days lie ahead and the bloc will be hoping that efforts to fill gas stocks and some favorable weather could see them through the winter. The ECB on the other hand is beyond being able to cross its fingers and hope for the best.

Restrictions weigh on Chinese PMIs once more

The day got off to a tough start after China released PMI data that was unsurprisingly poor. The data was naturally hampered by Covid restrictions but that has become a persistent headwind for the economy and it’s unlikely to change any time soon. What’s more, the weakness was widespread and while infrastructure stimulus may alleviate some of this, it’s not going to make it go away.

Bitcoin loses momentum

Bitcoin is off more than 1% on Monday following a pretty disappointing weekend. The recovery in the price over the last week has seen it climb back above $20,000 for the first time in a few weeks but it’s already struggling on the momentum front. A move back below $20,000 wouldn’t be anything to be concerned about though. As we’ve seen in recent months, it’s largely fluctuated around this level rather than being overly sensitive to it.

For a look at all of today’s economic events, check out our economic calendar:

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam