The week ahead | Calamatta Cuschieri

Friday Recap

European stock markets finished the Friday trading session on a mixed note as investors focus on a fresh set of economic data published earlier in the day, as well on the ongoing global trade concerns. Regarding the efforts to renegotiate the NAFTA accord, it was reported that the talks between the US and Canada are unlikely to be finished until the end of this week, while the White House Chief Economic Advisor Larry Kudlow said that dairy trade remains the most important point of contention in NAFTA talks. On the data front, German industrial production and trade balance figures were published in the morning, as well as the UK house price growth and the Eurozone GDP.

The FTSE 100 lost 0.59% at the end of the session, dragged down by the mining sector. The DAX finished trading just under the flat line, dipping 0.04%, with SAP SE the best and ThyssenKrupp the worst performer. Meanwhile, the CAC 40 gained 0.10% at the closing bell, buoyed by the luxury goods company Kering.

On the U.S. front, United States President Donald Trump said a new $267 billion worth of Chinese imports is ready to go on short notice, on top of the recently discussed $200 billion. Trump made the remark to reporters on board the Air Force One, commenting on the current trade crisis with Beijing.

The week ahead

Markets' eyes are on a host of central banks meetings to see if they can calm down currency markets, above all in Turkey. The Federal Reserve is expected to finally hike interest rates on the 13th of September but with the currency crisis on and near-18 percent inflation, will the move be enough to avert a hard landing.

Russia seem to be in a healthy state, with healthy currency reserves and a balance of payments surplus. However the possibility of growth-crimping Western sanctions being extended has put foreign investors to flight and driven the rouble to 2-1/2-year lows. Prime Minister Dmitry Medvedev is clearly trying to head off a rate rise at next Friday's central bank meeting but inflation-fighting governor Elvira Nabiullina has already signalled policy tightening.

Thursday will be the meeting day for the European Central Bank and Bank of England, which should be a lot less exciting than those in Turkey and Russia. The ECB is likely to firm up its decision to halve monthly asset purchases come October, bringing into sight the end of its 2.6 trillion-euro stimulus program. But to allow itself some flexibility, the ECB will likely maintain that it expects to, rather than will, exit stimulus at the end of 2018.

ECB chief Mario Draghi is likely to reiterate he remains on track to wind down QE, while keeping rates low well into next year -- comments no doubt that should cheer bond markets. Meanwhile the target interest rate rise in the European Area seem to be pushed further away as trade tensions, emerging market turmoil and Italian budget uncertainties are causing markets doubts.

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 are 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.