Market commentary: Euro area awaits unemployment figures

Today, on the first day of February, futures are indicating a positive opening in Europe. January was not the best of starts to the year, as markets were subdued across most asset classes. But as the saying goes, there is always a rally somewhere and indeed there was, European sovereign bonds returned an impressive 2% followed by Investment grade bonds, with the latter closing the month at 0.5% in the green.

Equities on the other hand closed the month in negative territory with the DAX and the Dow Jones closing the month at -8.80% and -5.07% respectively. Also during the month of January Oil was in the news day in day out. But was oil the main culprit, or a convenient excuse? Oil is definitely taking its toll on inflation as the current macro conditions remain subdued to say the least.

Japanese indices traded positively overnight, fuelled by the Bank of Japan’s decision to put rates into negative territory. Elsewhere in Asia was broadly mixed, as China’s PMI figure printed at 49.4, a figure below expectations and a three year low in relative terms.

This week is a busy week for economic data. Today we will wait for the final revisions to the manufacturing PMIs for January for the EU, Germany and France. Out of the US, the most important data is the personal income and spending, manufacturing PMI, construction spending and the important ISM manufacturing and prices paid. The U.K. manufacturing PMI survey and credit figures are also due to be released today.

Tomorrow, the most important announcement would be the euro-area unemployment for the end of the year 2015.

On Wednesday, we will be looking at the UK services PMI for January. Out of Europe, analysts will be looking at the final composite PMI readings for France, Germany,

Thursday, the spot light will be on the Bank of England as analysts will be particularly waiting for the rate decision, minutes, inflation report and perhaps to an extent more importantly comments from Governor Mark Carney. On Friday, Germany will be publishing its factory orders and analysts will be looking to analyse the impact on Europe’s largest economy from the slowdown in emerging markets.

In corporate terms, this week is also an important week as many companies on both sides of the Atlantic will be reporting their results. 119 companies out of the 500 companies in the S&P500 are scheduled to release their results. Over in Europe, 75 companies out of the 600 companies are set to report their fourth quarter results.

This article was issued by Darin Pace, Treasury Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.