The week ahead with Friday’s dip | Calamatta Cuschieri

Week review

On Friday, European markets settled in the red following the Wall Street sentiment where all three major indexes dropped around 1%. The Dow Jones lost over 300 points on reports that Michael Flynn was instructed by President Trump to talk to Russians.

German DAX fell 1.25% as ThyssenKrupp dropped almost 3%. In France, the CAC 40 was around 1% in the red with Valeo leading the losses. London FTSE 100 declined 0.36%. The worst performer was Royal Mail as it plunged somewhat over 4%.

Europe

European Central Bank analysts will be eyeing updates on services as well as retail. Some reports signalled that Eurozone economic growth hit the highest in over six years, with multi year highs seen in output, employment and prices.

Normally, the expansion would be consistent with the ECB taking a hawkish stance, however recent political concerns linked to separatism in Spain, and the German elections may see the ECB preferring to be on the side of caution for the moment. 

United Kingdom

In the UK, a fresh set of economic data will provide details on GDP growth and labour market trends in the fourth quarter. Services and construction reports for November will allow a clearer GDP estimate to be made for the quarter, alongside official trade, construction and industrial output data. The REC recruitment industry survey will also offer further clues about the health of the UK labour market heading into the final stages of the year.

United States

The U.S. will see the release of non-farm payroll data. October figures fell short of consensus, showing a smaller-than-expected rebound of 261,000. Focus will also be on wage statistics given that weak inflation has been a problem for the Fed despite a strengthening economy and robust jobs growth.

On a positive note, data showed a sustained growth in the US economy which was accompanied by signs of rising inflationary pressures. As such, solid numbers for both jobs and wage data will add to expectations of the Fed maintaining its projection of three rate hikes for 2018. While markets are currently pricing in a 90%-plus probability of a December interest rate hike, they remain divided over the number of rate increases next year.

Disclaimer:

This article was issued by Rodrick Duca, Trader 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 Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.