LONDON – Central bank intervention, the euro zone crisis and China's rise have expanded the list of data that moves markets, but surprises in measures such as PMIs and U.S. jobs numbers still pack the biggest punch.
Eager for an early view of economic momentum, investors put extra focus on purchasing manager indexes (PMIs), especially the flash, or preliminary, numbers from China, Europe and the United States.
The crucial question for most in the current environment is not so much what the numbers say about the respective economies, but what they mean for the central bank stimulus programs around the world that have been driving asset prices.
While U.S. labor market data has always been important, it too is under even more scrutiny as unemployment and the participation rate are the key variables for the Federal Reserve's $85 billion a month bond buying program.
"In general terms there's no bigger number than the U.S. non-farm payrolls," said Henk Potts, a cross-market strategist at Barclays in London, referring to the monthly jobs data.
"The U.S. consumer is the biggest driving force in the global economy and will continue to be so for some...time."
Analysts at Societe Generale have a model to predict the reaction of the S&P 500 to non-farm payrolls and have looked at the relationship between key economic data and share prices over the last 40 years.
Quantitative strategist Sandrine Ungari said the bank has found forward-looking data has a big impact on markets and, if used correctly, can predict slumps.
"According to our experiment there is more value in looking at forward-looking PMIs and confidence indicators rather than at downstream data like growth or unemployment," she added.
CENTRAL BANK FOCUS
Inflation in big economies has always been watched due to its relevance for interest rate setting, but Japan's has topped the list since its central bank last month launched a $1.4 trillion drive to push inflation up to 2 percent.
The euro zone crisis, meanwhile, has seen markets move on data that few economists even knew existed before it began.
Monthly figures published by the European Central Bank on the amount of sovereign bonds euro zone banks hold have become a proxy for trust in the bloc's troubled members, while its data on banks' deposit bases has also become regular market movers.
And recently, as focus has turned to whether the ECB and the Bank of England will employ more unorthodox policy to ensure their record low rates pass into the real economy, the spotlight has fallen on previously unfashionable bank lending rates.
"In a normal functioning economy the broader data give you most of what you need but in an environment of uncertainty like this you have to be much more forensic," said Bill Street, head of investments, EMEA, at State Street Global Advisors.
"Things like deeper lending numbers and combing through bank balance sheets are more important than they have ever been."
Oil markets generally move with growth and U.S. jobs numbers, but they are also impacted by demand forecasts from institutions such as OPEC and the International Energy Agency as well as geopolitical tensions in oil pumping parts of the world.
Market players have also become more focused on Chinese data, and credit numbers in particular since lending remains the major driver of its economic momentum.
China's consumption boom makes it especially influential for commodity prices, particularly metals, but also for luxury sectors such as cars, watches and other goods. At the same time, gambling revenues in Macau show how flush some Chinese feel.
Skepticism remains about the reliability of Chinese figures, however, meaning economists triangulate the numbers with data from nearby centers like Hong Kong and Taiwan.
But despite all the new data that has garnered interest in recent years, for many investors the real must-watch data still comes from the world's top economy, the United States.
"Everyone still perceives the U.S. to be the main engine of the world economy," said Hartmann Capital trader Basil Petrides.
"European stock markets wouldn't be where they are if the U.S. stock market wasn't above 15,000. If the Chinese stock market was at that level, you wouldn't see the same kind of effect."
(Additional reporting by Tricia Wright and Atul Prakash, graphics by Vincent Flasseur, editing by Nigel Stephenson)