10.01.14 Friday Morning

The first full week of trading of the New Year comes to a close today after a jittery start to the week. Volumes were relatively low in the markets at the beginning of the week with traders awaiting an influx of figures due to be released such as seasonal sales for major supermarkets and important economic data that would give traders an indication on the direction markets will take at the beginning of 2014.

US indices traded lower on Monday as shares in the transportation sector declined whilst precious metal Gold traded quite flat around $1238 after its rally during the week prior. The US dollar was under lots of pressure against its major counterparts on Monday after the US ISM non-manufacturing data revealed it decelerated to 53.0 in December from 53.9 in November. USD/JPY fell 0.75% and EUR/USD rose 0.43% after the release of the data.

Shares in the healthcare equipment sector on Tuesday helped US indices rebound from their losses that happened on Monday. Janet Yellen was confirmed as the next chair of the Federal Reserve at the beginning of the week, becoming the first woman to ever head the US central bank – smashing through the ‘glass ceiling’. The confirmation of this eased the markets; however it didn’t have a major effect on anything, especially as she isn’t set to do anything drastic at the beginning of her new role.

The Dow Jones was trading down 10 points at 1.30pm EST after the release of the FOMC minutes on Wednesday. The minutes showed the Fed was worried about overvaluation however didn’t bring many surprises and therefore it had little effect on global indices and equities. US ADP Non-Farm employment change data was higher than the 199,000 expected, with an actual figure of 238,000.

Mario Draghi spoke out at the European Central Bank news conference on Thursday, with equities sliding lower after his promise to keep record low interest rates for as long as necessary failed to convince investors. US unemployment claims were better than expected at 330,000, lower than the 337,000 expected figure.

All of the major supermarkets reported on their incredibly important figures for the festive season this week with the majority posting disappointing results. Like-for-like sales at Morrison’s fell 5.6% in the six weeks to Jan 5. Tesco’s like-for-like sales were also down 2.4% over the festive period. It seems the discount stores were doing well over Christmas this year with Aldi reporting sales up by more than a third in the three months to Jan 5.

Non-farm payroll data released on Friday increased at the slowest pace since Jan 2011 with 74,000 gains in payroll. This is significantly different from the slightly pessimistic estimate of 196k. US unemployment rate dropped to 6.7% which is the lowest since Oct 2008.

Stock of the Week: Intercept Pharmaceuticals

Shares in Intercept Pharmaceuticals rocketed over 280% on Thursday after they announced that the trial for a new liver drug was stopped early as they had met the primary endpoint of the trial. The market capitalisation was over $5.2 billion as shares rallied.

Next Week’s Notable Economic Events:

Monday:
 

USD – Federal Budget Balance @ 19.00pm

Tuesday:

GBP – CPI @ 9.30am

USD – Core Retail Sales @ 13.30pm

USD – Retail Sales @ 13.30pm

USD – FOMC Member Plosser Speaks @ 17.45pm

USD – FOMC Member Fisher Speaks @ 18.20pm

Wednesday:

GBP – CB Leading Index m/m @ 10.00am

USD – PPI m/m @ 13.30pm

Thursday:

EUR – ECB Monthly Bulletin @ 9.00am

USD – Core CPI m/m @ 13.30pm

USD – Unemployment Claims @ 13.30pm

USD – Fed Chairman Bernanke Speaks @ 16.10pm

Friday:

GBP – Retail Sales m/m @ 9.30am

USD – Building Permits @ 13.30pm

USD – Prelim UoM Consumer Sentiment @ 14.55pm.

 

Next Week’s Notable Earnings:

Monday 13 – Alliance Pharma PLC Trading Update

Thursday 16 – Computacenter PLC Pre-Close Trading Statement.