MORNING BID-PMIs to give pause for thought

·2 min read

A look at the day ahead from Dhara Ranasinghe

And so to the end of a week that has seen more corporate earnings in Europe and the United States, central banks from Tokyo to Frankfurt and Johannesburg meet, not to mention the inauguration of a new U.S. President that brings a fiscal boost closer.

But even financial markets need some time out every now and that appears to be the case on Friday, with world stocks just off record highs. The dollar, poised to log its worst week of the year so far, has steadied.

The release of flash PMIs from around the world, should provide some indication of how economies are faring into 2021. Given a resurgence of COVID-19 in Europe and fresh lockdowns, the data should point to weakness, and indeed the first figures out of Japan and Australia make for sombre reading.

Then again even PMIs may take a back seat as investors to vaccine rollout progress as the best guide to when economies might return to normal.

One worrying sign from Japan this morning -- core consumer prices slumped in December at the fastest annual pace in a decade, a sign of intensifying deflationary pressures.

One asset that's had a turbulent week is Bitcoin which is headed toward its sharpest weekly drop since September -- -- a 13% loss -- amid worries over regulation and the recent frothy rally.

Shares in German engineering group Siemens was up 2.3% in pre-market trade after the company reported better-than-expected preliminary results for its fiscal first quarter, driven by a strong performance of its digital division.

And in Italy, 10-year bond yields are trading near their highest levels since early-November after the European Central Bank said on Thursday it may not use the full firepower of its emergency bond buying scheme.

Italy's 10-year bond yield spread over Germany is now around 117 basis points, versus 112 bps at the start of the week.

Key developments that should provide more direction to markets on Friday: - UK retail sales recover weakly in Dec, borrowing jumps - Prosiebensat up 3.9% in pre-market trade after the firm report better than expected results. - Jan flash PMI globally -British retailers John Lewis, Premier Foods and Dixons enjoy better-than-expected Christmas sales - U.S. corporate Schlumberger reports earnings; Remy Cointreau in Europe

(Reporting by Dhara Ranasinghe)