19.12.14 Friday Morning

Europe
It was a busy week in Europe as the instability of oil led the Russian rouble to sharply rise against the dollar. This prompted the Russian Central Bank to hike interest rates from 10.5% to 17%; this didn’t have the intended effect, as the rouble rocketed to 80 per dollar. Whilst the rouble stabilised as the week went on, this currency crash, alongside the looming presence of EU QE led to the Swiss Central Bank slashing interest rates to -0.25% in order to artificially weaken the franc.

This led to a Europe-wide rally that aided the markets in recouping many of the points they had been shedding in the past two weeks. Since next week sees Christmas Day on Thursday, announcements are sparse. Any news arising from this week’s EU Economic Summit will likely have impact on the markets, and there are still Eurozone consumer confidence figures and German retail sales to look forward to.

Oil
After seeing prices go low enough to crucify the rouble at the start of the week, oil, which has dominated economic headlines recently, seemed to stabilise around a support level of $59 per barrel as the week went on. Obviously this price is not great for the commodity, but the mere fact that it has found a temporary support level, and the relative stability that this had led to, has provided bullish sentiment for the markets. However, positivity in the markets may not provide oil with any help in reaching its pre-collapse levels.

UK
At the start of the week things were looking bleak for the UK markets, as weak oil continued to weigh on the energy-heavy FTSE. However, Black Friday-inspired strong retail sales, rallies in oil at the tail of the week, and positivity stemming from the US led the FTSE to a bullish Thursday afternoon and Friday morning, leading the index to gain around 300 points. This good news was joined by a rise in wages, a lone positive for the Conservatives as Labour overtook them in the polls. Like Europe, the Christmas week next week means a quiet time for the FTSE, with only the UK Current Account and final GDP q/q in terms of significant data to be released.

US
Similar to Europe and the UK, the USA suffered at the start of the week, as a worldwide malaise, prompted by oil and joined by the rouble, suffocated any good news arising out of the country. However, Thursday saw the Fed discuss the possibility, and likelihood, of raising interest rates at some point in 2015, a sign of health in the US economy, and enough to drag the Dow Jones et al. up by their bootstraps. This meant the Dow closed out Thursday near its early-December record highs; it now could finally breach the 18000 mark before the end of the year. With unemployment claims and new home sales to be released next week, the US will most likely have a similarly quiet time to its Western neighbours.

Japan
Oddly for a country that held an election last Sunday, Japan had a relatively quiet week economically speaking. Shinzo Abe won re-election in a landslide victory, with a low turnout rating tainting his win. Following this the Nikkei followed the ways of the world, finding it difficult to break out of its slump at the start of the week. However, a strong trade balance, US Fed positivity and a reassuring statement from the Bank of Japan meant that by the end of the week the Japanese index was soaring, seeing it close out at similar levels to its QE-inspired highs.

Unlike the other major markets, Japan has a healthy amount of economic news next week, after a Bank Holiday on Tuesday. Household spending, Tokyo core CPI, retails sales and preliminary industrial production figures are all revealed next week; however with many of the other markets closed, the Nikkei will be on its own if this data comes in poorly.

Stock of the week: FedEx Corp
Despite Monday being the company’s biggest delivery day ever, FedEx’s earnings came in slightly less than forecast, with $11.9 billion in revenue instead of a predicted $11.99 billion. Stocks slipped nearly 4% to $167.72 following the announcement, but this drop seemed to be premature, as the following day the company recovered these losses, closing at 17410. Whilst it is not the Christmas present FedEx would have hoped for, this price still caps off an excellent year for the company on the markets.

Economic Diary, 22^th-26^th December 2014:

 

Monday 22^nd December:

Tentative – EUR Italian 10-y Bond Auction

3.00pm – USD Existing Home Sales

3.00pm – EUR Consumer Confidence

 

Tuesday 23^rd December:

23^rd-31^st – EUR German Retail Sales m/m

7.45am – EUR French Consumer Spending m/m

9.30am – GBP Current Account

9.30am – GBP Final GDP q/q

1.30pm – USD Core Durable Goods Orders m/m

1.30pm – USD Final GDP q/q

3.00pm – USD New Home Sales

 

Wednesday 24^th December:

1.30pm – USD Unemployment Claims

3.30pm – USD Crude Oil Inventories

11.50pm – JPY Monetary Policy Meeting Minutes

 

Thursday 25^th December:

3.45am – JPY BoJ Governor Kuroda Speaks

11.30pm – JPY Household Sharing

11.30pm – JPY Tokyo Core CPI y/y

11.50pm – JPY Prelim Industrial Production m/m

11.50pm – JPY Retail Sales y/y

 

Friday 26^th December:

1.30am – JPY Average Cash Earnings y/y

 

Earnings releases, 22^th-26^th December 2014:

 

Monday 22^nd December:

N/A

 

Tuesday 23^rd December:

Walgreen Co – Q1 2015 Earnings Release

CalAmp Corp – Q3 2015 Earnings Release

 

Wednesday 24^th December:

N/A

 

Thursday 25^th December:

N/A

 

Friday 26^th December:

N/A