09.01.15 Friday Morning

Europe
Fears over the Greek election at the start of the week, alongside weak construction PMI, meant that the Eurozone got off to a poor start. It was oddly a slide into deflation for the region that caused large gains in the middle of the week as investors took the poor figures as a sign that QE was certain to come at some time soon. Yet poor factory orders on Friday led the Eurozone indices lower as it proved to be a set of bad data too far. The euro had a similarly turbulent week as both the weak data, and the QE-inspired hope, caused the currency to plummet to 9 year lows in against the dollar. The euro is presently damned if it does and damned if it doesn’t, as it is squeezed by potential QE and the reality of the Eurozone’s economic situation.

Next week will most likely see another flurry of volatility as the region gears up for the decisive ECB meeting and the Greek election that come the week after as it faces its first big challenge of 2015. In a quiet week for data, next Friday will see the announcement of the final CPI y/y, and potentially the confirmation of Eurozone deflation.

US
The US saw big gains as the week went on after strong a trade balance release, and decent unemployment claims compensated for disappointing manufacturing data. However, the big boost was a show of confidence from the US Fed, which announced its faith in the US economy’s ability to recover despite the torrid worldwide situation. It was this statement that was the cause of much of the bullish sentiment on Wednesday and Thursday; yet on Friday, poor Chinese inflation data and more weaknesses in Europe meant that futures were pointing to a low open. There were also doubts over the strength of the non-farm figures to come on Friday afternoon; however these fears proved to be unfounded and better-than-expected data gave the Dow Jones a boost.

The US will see retail sales figure reveal the state of its Christmas period next week, alongside PPI data and an assessment of US inflation. This latter figure will be another important signifier for the Fed, and whether a rise in interest rates is feasible.

UK
The FTSE followed the US and Europe for much of the week, as moments of stability allowed the UK index to put its energy-sector woes to bed, however briefly. A combination of the US Fed’s positive sentiment and a bullish reaction on the markets to price-cut announcements from Tesco led the FTSE to major gains on Thursday. Yet by Friday morning it was back in a slump as Chinese and Eurozone data conspired to create a gloomy trading environment at the end of the week. The UK’s own inflation status will be examined next week with its CPI figure announcement, as well as PPI and RPI.

Oil
A potentially disastrous week was avoided somewhat by oil, as Brent crude touched $49 per barrel mid-week only to rebound and stabilise a support level of $51 per barrel. Yet with the commodity constantly fluctuating, it only seems a matter of time before this mark is left behind, like so many other of the commodity’s recent support levels. Once more oil will look to the US crude inventories announcement with trepidation, as it has been a constant source of anxiety for the commodity in recent times.

Stock of the week: Tesco PLC
After a horrible 2014, Tesco managed to turn its disappointing Christmas period into a boost for the entire supermarket sector, as it pledged to provide customer-felt price cuts in order to battle the bargain giants Aldi and Lidl. This caused a massive 15% growth on Thursday that was only slightly dented on Friday morning. This news helped lead Sainsbury and Morrisons to significant gains on the back of a bullish sentiment surrounding the supermarket-sector.

Economic Diary, 12^th-16th January 2015:

 

Monday 12^th January

3.00pm – USD Labour Market Conditions Index m/m

5.40pm – USD FOMC Member Lockhart Speaks

7.00pm – USD Federal Budget Balance

11.50pm – JPY Current Account

 

Tuesday 13^th January

Tentative – CNY New Loans

9.30am – GBP CPI y/y

9.30am – GBP PPI Input m/m

9.30am – GBP RPI y/y

3.00pm – USD JOLTS Job Openings

6.00pm – USD 10-y Bond Auction

 

Wednesday 14^th January

Tentative – European Court of Justice Ruling

10.00am – EUR Industrial Production m/m

1.30pm – USD Core Retail Sales m/m

1.30pm USD Retail Sales m/m

1.30pm – USD Import Prices m/m

3.00pm – USD Business Inventories m/m

3.30pm – USD Crude Oil Inventories

11.50pm – JPY Core Machinery Orders m/m

 

Thursday 15^th January

10.00am – EUR Trade Balance

1.30pm – USD PPI m/m

1.30pm – USD Unemployment Claims

1.30pm – USD Core PPI m/m

1.30pm – USD Empire State Manufacturing Index

3.00pm – USD Philly Fed Manufacturing Index

11.50pm – JPY Tertiary Industry Activity m/m

 

Friday 16^th January

10.00am – EUR Final CPI y/y

1.30pm – USD CPI m/m

1.30pm – USD Core CPI m/m

2.15pm – USD Capacity Utilization Rate

2.55pm – USD Prelim UoM Consumer Sentiment

 

Earnings releases, 12^th-16th January 2015:

 

Monday 12^th January

Tiffany & Co – Corporate November-December 2014 Holiday Sales Release

Taylor Wimpey PLC – Trading Statement Release

 

Tuesday 13^th January

GameStop Corp – 2014 Holiday Sales Release

KB Home – Q4 2014 Earnings Release

CSX Corp – Q4 2014 Earnings Release

Greggs PLC – Christmas Trading Update

Rathbone Brothers PLC – Trading Statement Release

WM Morrison Supermarkets PLC – Christmas Trading Statement

ASOS PLC – Christmas Statement

Debenhams PLC – Interim Management Statement Release

 

Wednesday 14^th January

Wells Fargo & Co – Q4 2014 Earnings Release

Burberry Group PLC – Q3 2014/15 Trading Statement Release

Fenner PLC – Interim Management Statement Release

Ocado Group PLC – Christmas Trading Statement Release

Premier Oil PLC – Trading Statement Release

 

Thursday 15^th January

Bank of America Corp – Q4 2014 Earnings Release

Citigroup Inc – Q4 2014 Earnings Release

Intel Corp – Q4 2014 Earnings Release

 

Friday 16^th January

Goldman Sachs Group Inc – Q4 2014 Earnings Release

Comerica Inc – Q4 2014 Earnings Release

SunTrust Banks Inc – Q4 2014 Earnings Release