Monday, 24 March 2025

Markets on Edge: Key PMI and Inflation Data to Shape Global Outlook This Week

By Oluwayankunmi Olaleye-Kehinde on March 24, 2025

This week, financial markets brace for major economic data releases as investors seek clarity on the global outlook amid escalating trade tensions. Flash manufacturing and services PMIs from the US, UK, and EU, alongside inflation reports from top economies, will set the tone for market sentiment.

Global Stock Markets on Alert

Last week, global equities took a hit as central banks flagged concerns over slowing growth and inflation, fueled by Trump's latest tariffs on steel and aluminum. Now, all eyes turn to economic indicators for insight into how businesses and consumers are coping.

Manufacturing and Services PMIs: Key Insights Ahead

S&P Global will release flash PMIs for March on Monday, providing a snapshot of economic health across major economies. A PMI above 50 signals expansion, while a reading below 50 indicates contraction.

Eurozone: After months of struggle, the eurozone's manufacturing PMI showed signs of recovery in February, rising to 47.6. March data could offer further optimism, though fresh US tariffs may pose new risks. Meanwhile, the services PMI remains just above the growth threshold at 50.6, with Germany's service sector leading the charge.
UK: The UK's manufacturing PMI has been stuck in contraction, but March is expected to show mild improvement at 47.3. Services PMI, which climbed to 51 in February, remains fragile amid economic uncertainty.
US: While US manufacturing PMI surged to 52.7 in February due to preemptive stockpiling ahead of tariff hikes, services PMI dipped to 51. Projections for March place both indicators slightly lower, reflecting cautious business sentiment.

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Inflation Reports: High-Stakes Data for Investors

This week's inflation data could shape central bank policies in the coming months:

US: The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, will be in sharp focus. January's core PCE fell to 2.6%, but the Fed recently raised its 2025 forecast, citing economic uncertainty. A hotter-than-expected reading could rattle stock markets.
UK: Inflation hit 3% in January, its highest in nearly a year, leading the Bank of England to hold rates at 4.5%. February's inflation is expected to ease slightly, but markets will also watch for signals in the UK government's budget announcement.
Europe: Spain's inflation is expected to cool to 2.7% in March, down from 3% last month, while France, which saw its lowest inflation in four years (0.8% in February), could see a slight uptick.

What's at Stake?

With the global economy at a crossroads, this week's data could determine market direction. If PMIs show resilience and inflation remains contained, investors may find renewed confidence. However, any signs of economic weakness or sticky inflation could trigger fresh volatility.

Markets are watching. Are you?