31.12.14 Wednesday Morning

Europe
As the markets wound down for 2014’s close, it was a quiet week of news dominated by the Greek election situation on Monday. Greek presidential candidate Stavros Dimas failed to be elected by parliament for a third time, meaning Greece will see a general election in January. Whilst this in theory should only provide the same amount of volatility that any election does, in practice the potential for a Syriza victory, a party that wants to renegotiate Greek debt and end austerity measures, could provide an extra dose of instability for the Eurozone. In keeping with this fear, the Eurozone indices spent this week fearful of the future, shedding points left, right and centre.

However, as we enter 2015 the Eurozone has reason to be cautiously optimistic for if (or more likely when) Draghi and the ECB implement quantitative easing. This may cause the euro to suffer; yet, it will provide (again in theory) a major boost to an economy that is seen as the weak link in the relative global stability the worldwide markets have reached post the 2008 crisis. The area will be hoping for a good start to the New Year next week as it announces German retail sales, Italian and Spanish services PMI and German unemployment change.

US
With the Greek-situation infecting all markets on Monday, the USA indices could not help but slip; however, they managed by and large to cling onto most of the gains made in the Santa-rally, meaning the Dow Jones is likely to close out the year above the 18000 level it worked so hard to gain in 2014. Similarly, the NASDAQ is approaching the 5000 point record closing high from March 2000; it will not take a lot of good news to push this index to a new record. However, with consumer confidence falling, and a New Year’s Eve surprisingly full for America, the US markets will have to weather one more round of figures before we enter 2015.

Next week then sees the volatility-inducing non-farm employment change figures, a point of much speculation for the markets. This major piece of data will set an early tone for the US economy, as the Fed tries to figure out what an appropriate and rewarding interest rate rise in 2015 would look like.

Oil
Despite attacks on Libyan oil ports, oil suffered from fears of increased US production, as the US announces more crude oil inventory figures on New Year’s Eve afternoon. After slipping to around $57.5 per barrel, far below the supposed $61 stabilising mark Saudi Arabia suggested, oil is still confounding investors weeks after the oil price crash began. As per usual there is no white knight on the horizon for oil, but merely announcements that could further harm the commodity.

UK
Disappointing housing price growth figures, the aforementioned Greek election news and low oil dragged the FTSE down at the start of the week, as the UK index saw the same kind of problems that have plagued it in the tail end of 2014. The FTSE is set to close the year lower than it opened, largely due to the energy-company-heavy index being dragged down by the perpetual oil crisis of the past few months. As next week returns to a normal schedule of economic data, the UK sees construction and services PMI, the official bank rate and manufacturing production as the first big tests of 2015, with the FTSE hoping it can put a disappointing end to 2014 behind it.

Stock of the week: Next PLC
Next ended the year as one of the UK’s best performing stocks despite an initial downgrading of yearly earnings following an ‘unseasonably warm’ autumn season that led to sector wide decline in clothing sales. Monday saw the company revealed that full-price sales were up 2.9% compared to the expected gain of 1.1%; this led to share prices rising nearly 3.5% to £67.33, significantly higher than Next’s £58.92 per share 2014 open.

Economic Diary, 5^th-9th January 2015:

 

Monday 5^th January:

5^th-7^th – EUR German Retail Sales m/m

All Day – EUR German Prelim CPI m/m

9.30am – GBP Construction PMI

 

Tuesday 6^th January:

1.45am – CNY HSBC Services PMI

8.15am – EUR Spanish Services PMI

8.45am – EUR Italian Services Pmi

9.30am – GBP Services PMI

3.00pm – USD ISM Non-Manufacturing PMI

3.00pm – USD Factory Orders m/m

 

Wednesday 7^th January:

8.55am – EUR German Unemployment Change

Tentative – GBP Halifax HPI m/m

10.00am – EUR CPI Flash Estimate y/y

10.00am – EUR Core CPI Flash Estimate y/y

10.00am – EUR Unemployment Rate

1.15pm – USD ADP Non-Farm Employment Change

1.30pm – USD Trade Balance

3.30pm – USD Crude Oil Inventories

7.00pm – USD FOMC Meeting Minutes

 

Thursday 8^th January:

Tentative – CNY Trade Balance

7.00am – EUR German Retail Sales m/m

9.30am – GBP BoE Credit Conditions Survey

10.00am – EUR Retail Sales m/m

12.00pm – GBP Official Bank Rate

12.00pm – GBP Asset Purchase Facility

Tentative – GBP MPC Rate Statement

1.30pm – USD Unemployment Claims

 

Friday 9^th January:

1.30am – CNY CPI y/y

1.30am – CNY PPI y/y

7.45am – EUR French Industrial Production m/m

9.30am – GBP Manufacturing Production m/m

9.30am – GBP Trade Balance

1.30pm – USD Non-Farm Employment Change

1.30pm – USD Unemployment Rate

1.30pm – USD Average Hourly Earnings m/m

3.00pm – GBP NIESR GDP Estimate

 

Earnings releases, 5^th-9th January 2015:

 

Monday 5^th January:

McBride PLC - Trading Statement Release for the six months ending 31 December 2014

Ford Motor Co – December 2014 Sales Release

 

Tuesday 6^th January:

Topps Tiles PLC – Q1 2015 Interim Management Statement Release

AutoNation Inc – December 2014 Corporate Sales Release

Lindsay Corp – Q1 2015 Earnings Release

Commercial Metals Co – Q1 2015 Earnings Release

 

Wednesday 7^th January:

Monsanto Co – Q1 2015 Earnings Release

Supervalu Inc – Q3 2015 Earnings Release

 

Thursday 8^th January:

Bed Bath & Beyond Inc – Q3 2015 Earnings Release

Pricesmart Inc – Q1 2015 Earnings Release

 

Friday 9^th January:

Acuity Brands Inc – Q1 2015 Earnings Release

Infosys Technologies Ltd – Q3 2015 Earnings Release