WEEKLY MARKET SNAPSHOT 19/2 – 23/2|The latest GDP growth figure for the U.K. and the release of the FOMC rate setting minutes will be the most closely watched calendar events during the coming week
The U.K. economy has (arguably) held up well to the potential negative impact of Brexit. The current YoY growth figure is 1.5% and whilst it’s a fall from the figures of between 2.7%-2.0% that the country was reporting in 2015/2016, the economic Armageddon many predicted after the referendum vote, hasn’t materialized. However, with the clock ticking down to the exit day in March 2019, location and trade decisions have to be made by major corporations and consumer sentiment may also begin to suffer, therefore growth may become crimped over the coming months. We can expect sterling reaction if the 1.5% figure is improved, which many analysts are predicting. Germany’s GDP figure will also come under scrutiny, predictably the forecast is for the reading to remain high at 2.90%.
Other than reporting various PMIs and CPI data for various economies and the E.Z., the remaining standout event of the week involves the publication of the minutes from the last FOMC monetary policy meeting, a report that’ll be analyzed to identify any dissenting voices to the FOMC/Fed current forward guidance in relation to the commencement date for the three planned interest rate rises for 2018 and any potential quantitative tightening.
Sunday starts our week with data from Japan, including the latest: trade balance, import and export data. As a net exporter Japan runs a trade surplus, not a deficit and despite competition from China, the USA and Germany, Japan is still a significant exporter. Up to December the YoY growth figure was a highly impressive 9.3% and analysts will be looking for this pattern of growth to be maintained.
Monday morning begins with the monthly dairy auction metrics from New Zealand, a carefully monitored barometer of economic health in N.Z., given the country’s reliance on this sector for export growth. The U.K. house sale comes under scrutiny, as Rightmove publish their latest asking price survey early Monday morning. Japanese bond purchases will also come under scrutiny, particularly as Japanese GDP growth has reduced to 0.10% QoQ, possibly putting back any thoughts of tapering market operations and reducing monetary stimulus. As European markets open, the Eurozone current account surplus will be published and construction output for the single currency bloc will also be revealed, which rose to an impressive 2.7% YoY for December.
On Tuesday morning there’s a cluster of Japanese data to monitor, including supermarket sales, department store sales, convenience store sales and machine tool orders. As European markets open, the latest Swiss import and export figures are released, following the report of Germany’s producer price index. The latest ZEW surveys are delivered, where the main focus will be the readings for sentiment and expectations. The Eurozone consumer confidence reading for February will also be revealed. The latest U.K. trade body the CBI will publish its latest trends for orders and selling prices.
On Wednesday morning, Australia’s wage price index and construction work done metrics are released, a raft of Japanese bond purchase results data will also be delivered. The all industries activity reading will also be published. As attention turns to Europe the monthly services, manufacturing and services PMIs for Italy, Germany and the wider E.Z. will provide interesting reading. From the U.K. a cluster of results for unemployment, wage inflation, public borrowing levels and public finances will be released. As USA markets open, Markit the PMIs for the country’s manufacturing, services and composite will be delivered, home sales metrics will also be released. Investors will focus on the release of the minutes from the latest FOMC meeting, of particular relevance given the recent market sensitivity regarding the recent equity stock market sell off and subsequent recovery.
Thursday begins with New Zealand credit card spending information, both YoY and MoM. As European markets open, the latest German IFO readings are revealed, as is Swiss industrial output. Focus will turn to the latest U.K. GDP reading, at 1.5% YoY investors will watch this carefully for any signs of structural economic weakness. The latest quarterly export and import data for the U.K. will be closely watched, at -0.7% for Q3 2017, the expectation that a weaker Brexit pound would stimulate exports, appears to be unfounded.
In a busy afternoon for USA economic calendar news, the weekly new jobless claims and continuous claims data will come under scrutiny due to employment and wage rise data being a hot investor topic. The latest oil and gasoline data will also come under examination, as WTI recently dipped under the $60 a barrel level. The day finishes with Japan’s latest CPI figures monthly and year on year, the YoY figures is expected to come in at 1.0% YoY up to January.
On Friday the latest Japanese bond purchases will be carefully monitored, as European markets open a cluster of German data including demand, spending, investment and consumption that will be closely watched, as will be the latest import, export and GDP figures. The latest Eurozone CPI figure may offer up clues as to the slack the ECB have to cut back on the APP monetary easing. Canada is in the news, as the country’s latest series of CPI figures are broadcast. The week’s calendar events ends with the Baker Hughes rig count, a metric always watched, in relation to the pricing of WTI oil.
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