Market News & Analysis

Top Story

What mattered last week and a preview of the week ahead

What mattered last week:

  • The benchmark U.S. stock index, the S&P 500 posted solid gains for a second straight week, shrugging off concerns over the spread of the coronavirus (now named Covid-19).
  • As the market continues to take the view that the hit to growth from Covid-19 in the shape of travel restrictions, factory closures, etc will be temporary.
  • And despite a big jump in Covid-19 cases last week, under a revised methodology for diagnosing the virus.
  • The RBNZ kept interest rates on hold at 1.00% as expected, but failed to deliver the dovish message the market was hoping for prompting a sharp rally in the NZD.
  • Elsewhere in FX, the EURUSD finished the week at near 3 year lows as the euro areas exposure to China weighed.
  • Locally, the ASX200 closed the week up over 1.5% near 7130, inspired by strong buying of the banking sector.
  • The AUDUSD briefly made fresh cycle lows at .6660 before closing the week above .6700c.

For the week ahead, the key events are:

Australia: RBA meeting minutes (Tuesday), wage price index (Wednesday), employment (Thursday).

  • Employment (Thursday): After a strong jobs report in December, the expectation is for some payback in January that takes the unemployment rate back up to 5.2% with jobs growth of 10,000.

December half earnings season continues with reports from companies including BHP, QBE, Brambles, Lendlease, and Crown.

New Zealand: Global dairy trade (Tuesday), PPI (Thursday).

China: House price index (Monday), PBOC Loan Prime Rate interest rate decision (Thursday).

Japan: GDP (Monday), balance of trade (Wednesday), CPI (Friday).

U.S.: Building permits, PPI (Wednesday), FOMC meeting minutes (Thursday), Markit Flash PMI’s (Friday).

  • FOMC meeting minutes (Thursday): The minutes are likely to acknowledge the threat to growth from the coronavirus while remaining positive on the overall trajectory of the U.S. economy.

December quarter earnings season winds down this week with just 20% of S&P500 companies left to report.

Canada: Manufacturing sales (Tuesday), CPI (Wednesday), new house price index (Thursday), retail sales (Friday).

  • Retail sales (Friday): Household consumption has been soft and a reason for the dovish tone from the BoC in January. The market is looking for the headline number to rise by 0.7% m/m in December and a more modest 0.5% m/m rise from core (ex-auto/gas) sales.

Euro Area: EA and German ZEW sentiment index (Tuesday), German GFK consumer confidence, PPI (Thursday), EA and German Markit Flash PMI’s.

  • Euro area ‘flash’ PMIs (Friday): The first real look at how the coronavirus has been impacting the euro area economy and expectations are for a modest fall in February. However, there is a risk that the euro area manufacturing PMI could retest last year’s lows in the coming months.

UK: Employment (Tuesday), CPI (Wednesday), retail sales (Thursday), Markit Flash PMI’s (Friday).

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.