Market awaits next catalyst

The week has kicked off in a rather quiet fashion. The lack of volatility in the Asian spilled across into Europe and Wall Street has opened in a similar way.

The week has kicked off in a rather quiet fashion. The lack of volatility in the Asian spilled across into Europe and Wall Street has opened in a similar way. 

The Dow edged lower following disappointing results from Goldman Sachs. The bank missed on estimates for sales and trading performance. There were no fireworks for Citigroup either, which matched expectations. These so-so results come following a solid performance from JP Morgan, which reported record breaking profits on Friday.

Fears of slowing global growth have lingered, particularly since the dovish turn from the Fed at the start of the year. More recent data, particularly from China and the Eurozone has shown signs of stabilisation and investors are now looking to US earning season for indications as to how well corporate American is holding up. However, whilst banks are expected to report reasonably solid results, earnings outside of this sector could struggle to impress. China’s GDP release on Wednesday could hit risk appetite hard.

Brexit on pause, UK data back in focus

The pound started the week in a lacklustre manner, with investors pausing for breath after the whirlwind of recent Brexit developments. With Parliament on Easter break, pound traders will switch attention back towards data. Tomorrow sees the release of UK wage growth data which is expected to tick higher to 3.5%, up from 3.4%. Wednesday March’s inflation figure is expected to show prices increasing back to 2% year on year.

With Brexit having been kicked 6 months down the road, the BoE could feel more comfortable about hiking rates. Any signs of inflationary pressures increasing owing to stronger wage growth or higher inflation could tempt more BoE policymakers to adopt a hawkish stance. Therefore, solid readings on Tuesday and Wednesday could lift the pound back towards $1.32


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.