Weekly Trading Update
06.12.13 Friday Morning
Stocks have suffered consecutive bearish days this week amid tapering worries due to a 3.6% growth in US Q3 GDP, up from initial estimates of 2.6% and also strong sub 300,000 jobless claims reports meaning tapering could happen in the New Year. Analysts first predicted that the Federal Reserve would start tapering back their bond buying programme in March 2014, however strong figures have resulted in markets closing in the red all week due to fears the monetary stimulus will have an early pull back. US non-farm payroll figures are 203k, up from the prediction of 180k which may fuel tapering fears further.
The S&P 500 has closed in the red throughout the week, down 22 points (1.2%) in total by Thursday, however this is only a small slip back considering it has risen 150 points over the past eight weeks. Fears over tapering look to be preventing the ‘Santa Rally’ from happening this year, especially as Christmas draws closer when volumes will drop as investors begin to pack up for the festive period.
ECB president Mario Draghi spoke on Thursday, stating the ECB will keep interest rates low at 0.25% for as long as necessary, as expected. Due to the negative economic activity in Italy and France, this low rate could be set for the foreseeable future. Mr Draghi has said he hopes inflation will pick up after the cut in interest rate makes its way through the economy, a longer term view however reassuring markets by saying they still have necessary tools to get economic activity back on track. The euro took off against the dollar and the yen after Mr Draghi spoke about the unchanged interest rates and also as he avoided hints of any easing measures.
Chancellor of the Exchequer, George Osborne, delivered his Autumn Statement on Thursday and said that the British economy will grow by 1.4% in 2013 compared to initial predictions of 0.6% in March. This marks a boost for the Conservative Party and has come at a good time as 2015 general election campaign planning will begin shortly.
Gold has followed suit, heading for a 2% weekly decline on Thursday after a choppy week of trading due to rising fears of an early pull back of the Federal Reserve’s monetary stimulus. Results from Friday’s US non-farm payroll data could be the catalyst of any further downside or upside. By mid-week, miners had dragged the FTSE 100 due to falling metal prices, reiterating global demand is weak.
Non-farm data from across the pond added 203,000 to employment payrolls in November and has reversed the bearish run that has been happening throughout the week with investors believing that the bullish run has not yet come to an end. Analysts believed anything higher than the consensus would result in sending markets lower; however this was not the case with Indices gaining back points after a falling week. Professional and business services transport and warehousing and health care were amongst the biggest employment gains. Unemployment rate dropped to the lowest in five years to 7.0%, a sign of stronger economic growth in the US.
Stock of the Week – Petrofac –116pts
The oil services group, Petrofac, has hit a two year low this week after management stepped back from long-term earnings targets.
Open (Monday)
6658.5
Close (Thursday)
6500.8
Change
-2.37
High
6658.5
Low
6468.3
Open (Monday )
16092
Close (Thursday)
15816
Change
-1.71
High
16092
Low
15793
Open (Monday)
1.6416
Close (Thursday)
1.6336
Change
-0.49
High
1.6437
Low
1.6305
Open (Monday)
1243.7
Close (Thursday)
1.6336
Change
-1.39
High
1250.8
Low
1211
Next Week’s Notable Economic Data:
Monday
- EUR - German Industrial Production @ 11.00
- GBP - BOE Carney Speaks
- USD - FOMC Member Bullard Speaks @ 18.05
Tuesday
- GBP - Manufacturing Production @ 09.30
- EUR - French Industrial Production @ 07.45
- GBP - Trade Balance @ 09.30
Wednesday
- USD - Treasury Sec Lew Speaks @ 15.00
- USD - Crude Oil Inventories @ 15.30
- USD - Federal Budget Balance @ 19.00
- USD - 10-y Bond Auction @ 18.01
Thursday
- USD - Unemployment Claims @ 13.30
- USD - Core Retail Sales @ 13.30
- GBP - CB Leading Index @ 10.00
Friday
- USD – PPI @ 13.30
- EUR - Unemployment Change @ 10.00
Next Week’s Notable Earnings:
Monday 9 Dec
- Jeff Group PLC – Prelim 2013 earnings release.
Tuesday 10 Dec
- TUI Travel PLC – Prelim 2013 earnings release.
Wednesday 11 Dec
- PZ Cussons PLC – Trading Update
Thursday 12 Dec
- Sports Direct International PLC – Interim 2013 earnings release.
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