Following a week of heavy losses, equity markets struggled to find clear direction last week as a positive start to the US corporate earnings season failed to offset political risks weighing on sentiment. This week sees no let-up in political news flow with developments in Saudi Arabia and Italy chiefly in focus. On the macroeconomic front, the European Central Bank’s monetary policy meeting and third quarter estimates for US economic growth numbers will be the highlight of the week.
After a couple of weeks of suffering, investors will be hoping this week can instil some confidence back into markets. One aspect that could restore some confidence is in US corporate earnings released this week as we enter the latest quarterly earnings season. According to Thomson Reuters, consensus is for third-quarter earnings to grow 21.5% compared to last year’s third-quarter.
The week after the US employment report tends to be a quiet affair and true to form, this week is a little light on data. The highlights however include CPI inflation numbers from the US, trade data out of China and the start of the third quarter corporate earnings results in the US.
It’s a busy week as we enter the final quarter of the year, with the release of the global manufacturing and service sector sentiment surveys, the US employment report and the Conservative Party Conference set to occupy domestic investors’ attentions.
It feels like Autumn is starting to hit its stride this week, whether financial markets will cool down with the weather remains to be seen. Global politics is certainly heating up. From this week we are introducing a short section focused on our current thoughts around Brexit, which we hope will keep readers informed on recent machinations. If we’re lucky then we’ll be able to stop writing about Brexit on March 29th 2019…
With the UK in full focus last week (more on that below), this week we have inflation and retail sales to look forward to on Wednesday and Thursday respectively. Headline inflation is expected to tick up further to 2.7%, partly due to the rising oil price we have experienced over the past year (Brent Crude oil has risen from $55 per barrel up to around $78 in the past twelve months). Retail sales for August are expected to fall slightly for the month, which is unsurprising considering the strength of July due to the hot weather and the World Cup boosting consumer spending.
As we have mentioned in the past, the week following the release of the monthly US unemployment report (more on that below) is typically quite light on economic data. However there are two important central bank meetings towards the end of the week which will set expectations for interest rate policy in the UK and Europe. We’ll also see inflation numbers from Germany and the US before we get to the weekend when the party conference season kicks off with the Liberal Democrats down in Brighton.
It has been a quiet couple of weeks in regards to economic data releases. However, this week sees a step-up in activity with the closely watched US employment report and global services and manufacturing sentiment surveys for August set to occupy investors’ attentions. Additionally, as politicians return from their summer recess, we expect key political battles to return to the fore with Italy in particular focus, alongside the usual culprits of Brexit and Donald Trump.
There is not a huge amount to get excited about in this holiday shortened week, with relatively few major economic indicators released to keep investors on their toes. The highlights however include inflation and housing data from the US, a manufacturing confidence survey from China and consumer borrowing figures in the UK.
We have kicked off this week on news that Greece has completed its three-year emergency loan programme, which was part of the biggest bailout in financial history. Despite the milestone, the economy still has a long way to go before returning to a healthy status; however it’s certainly a step in the right direction. Regardless, we quickly turn our attention to the next potentially problematic event for the Eurozone: the Italian budget. There were reports last week that budget negotiations had begun, which spooked markets as investors sold off Italian bonds. A key threat of these tense negotiations, which are expected to be concluded by mid-October, is whether they stick within the fiscal limits that Brussels require.