13.09.13 Friday Morning

Global indices have continued to surge this week on the back of mounting positive news flow, triggered by events on August 28th when Western lawmakers blocked imminent military action against the Assad regime in response to a chemical weapons attack. On Tuesday, bullish investors got the boost they were hoping for when the Russian government moved to placate the situation by insisting that Assad hands over his entire chemical weapons stockpile.
The White House has warned that whilst the U.S. is no longer on the brink of military intervention in Syria, a diplomatic solution will take “some time”. Obama has pledged to pursue talks despite scepticism from U.S. lawmakers that Damascus would make good on a Russian plan to surrender its chemical weapons. Syrian President Bashar al-Assad said any deal to surrender the nation’s chemical arsenal must be a “two-way street” in which the administration of President Barack Obama drops its military threats and stops arming Syrian rebels.
There is a suspicion that with no other major catalysts to spark further gains or trigger a sell-off, investors may decide to hold fire until the Federal Reserve meeting due to be held next Tuesday-Wednesday. The Federal Reserve, due to meet to discuss the possibility of trimming their monthly $85 billion bond purchases, has said any reduction in stimulus will be tied to a sustained recovery in U.S. employment.
The price of gold is heading for its worst weekly loss in more than 2 months as we edge closer to next week’s Federal Reserve meeting. With the majority of economists surveyed of the belief that the Fed will indeed decide to trim its monthly bond purchases, investors are losing faith in the metal as a store of value. Gold tumbled 21 percent this year, set for the first annual drop in 13 years.
Britain embarked on its largest privatisation in decades when it said it would float the majority of the near 500-year-old Royal Mail postal service. The government said a stock market flotation would take place in coming weeks but it said the size of the sale would depend on market conditions.
Surveys showed business activity in Britain rose last month at a pace unmatched by any of its major G20 peers, a huge contrast to the early part of the year when there was widespread talk of a "triple dip" recession. Looking ahead, there is a lot more budget austerity to come, which has drained growth across Europe more than governments had envisaged. And there is always a chance the eurozone's sovereign debt crisis will flare up again.
The main focus of investors next week will fall on both developments in Syria and next Wednesday’s Federal Reserve meeting. With the gauntlet laid down by Assad, insisting that Obama stops arming the rebels, it is now up to the Obama regime to decide whether or not to appease Assad or not.
With a decision on tapering expected by Wednesday, trading earlier in the week could be extremely range bound. An increase in U.S. retail sales should underpin predictions the Fed will cut its stimulus programme at a meeting on September 17-18, putting risk assets under pressure.

Stock of the Week - Apple
Apple shares have plummeted following the release of their latest iPhone range with investors fearing that Apple is not being aggressive enough in its fight against Google’s Android system. Apple's shares were down about 3 percent at $480.50 (304.50 pounds) before the market opened on Wednesday, a day after it unveiled the 5S, a high-end iPhone with a fingerprint scanner as well as a cheaper 5C model targeted at emerging markets.

Next Week’s Notable Economic Events:

Tuesday –

• GBP – CPI y/y @ 09:30
• EUR – German ZEW Economic Sentiment @ 10:00
• CAD – Manufacturing Sales @ 13:30
• USD – Core CPI m/m @ 13:30

Wednesday –

• GBP – MPC Asset Purchase Facility Votes @ 09:30
• GBP – MPC Official Bank Rate Votes @ 09:30
• USD – Building Permits @ 13:30
• USD – FOMC Economic Projections @ 19:00
• USD – FOMC Statement @ 19:00
• USD – FOMC Press Conference @ 19:30

Thursday –

• JPY – BOJ Gov Kuroda Speaks @ Tentative
• CHF – Libor rate @ 08:30
• GBP – Retail Sales m/m @ 09:30
• USD – Unemployment Claims @ 13:30
• USD – Existing Homes Sales @ 15:00
• USD – Philly Fed Manufacturing Index @ 15:00

Friday –

• JPY – BOJ Gov Kuroda Speaking @ Tentative
• CAD – Core CPI m/m

 

Next Week’s Notable UK Earnings:

Tuesday –

• Galliford Try Preliminary 2013 Earnings Release
• Debenhams Full Year 2012/13 Sales Release

Wednesday –

• Redrow Preliminary 2013 Earnings Release
• Smiths Group Pre-Close Trading Update

Thursday –

• Booker Group Q2 Trading Update