05.12.14 Friday Evening

UK
The focus of this week for the FTSE was the Autumn Statement, which arrived on Wednesday, and left the UK index displeased. The FTSE dipped as George Osborne announced new taxes for banks, a reform to stamp duty charges that will hit high-end property developers, and disappointing economic growth figures. This was compounded by Draghi’s non-news on Thursday; however by Friday the FTSE was looking healthier as the global indices righted themselves.

Next week sees manufacturing production, industrial production, and trade balance figures in the UK. The weak growth data arising from the Autumn Statement means there is pressure on these figures to provide some good news for the overall health of the UK economy.

Europe
Much like in the UK, the Eurozone was focused on one big announcement this week: the ECB conference where President Draghi was expected to announce firm action for Eurozone stimulus. However, Draghi instead recycled the same comments he has made for the past month, and, disappointed with the lack of concrete news that investors were expecting, the DAX et al all fell in the wake of the conference. By Friday the European indices had stabilised and began to improve as the initial shock of Draghi’s non-announcement gave way to the consideration of some of his more dovish comments.

Whilst next week has nothing as significant as this ECB conference for the Eurozone, there are some important events. The targeted long term refinancing option announcement will be carefully analysed following the delay of QE, whilst poor industrial production figures next week will pile more pressure on the ECB to hurry with their stimulus decision.

Japan
The Nikkei had a strong week this week, posting 6 days of gains in a period that many suspected would be volatile for the index. The Nikkei is seemingly ignoring any uncertainty in the run up to Japan’s snap election, perhaps suggesting the confidence around an Abe victory. However, as the election looms closer, on Sunday 14th December, next week may seem some uncertainty creep into the Japanese markets. It seems to have already begun to affect the yen, which had a bad week against the dollar.

US
After some post-Thanksgiving, oil-inspired wobbles from the Dow, the US index looks set to close out the week encroaching on the 18000 mark, after setting and breaking a few records this week. The Dow was boosted by excellent non-farm employment change figures that came in at 321k, alongside a dominant dollar. The US currency finally breached the 120 mark against the yen on Thursday, and was looking on Friday to be reaching the 121 level. This is only 3 points away from the all-time high of 124.

With next week seeing retail sales figures, as well as unemployment claims and PPI, there is a chance a bad batch of data could slow down the US markets’ run. However, as has been seen time and again recently, there are only a few outside factors that have been affecting the Dow et al., and US data is oddly not one of them.

Brent Crude Oil
One of the factors that is still able to have a negative effect on the US, as well as global, markets is oil. Following the OPEC decision not to cut production last week, oil has continued to maintain the $70 per barrel level, spending much of the week below that mark. There is little to look forward to for oil next week, with no announcements on the cards that could turn the commodity’s fortunes around. The one bright spot might be US crude oil inventories; oil production in the US fell, however slightly, recently, and another drop may spur oil on if it happens.

Gold
Despite a wobble on Monday after the Swiss failed to vote ‘yes’ to expanding gold reserves, the metal managed to dance around the $1200 per ounce level for much of the week. However it has failed to stabilise fully at this level, and has shown no real sign of being able to escape the gravitational pull of this number. With the US dollar still performing strongly, supported by the US markets, gold will be hoping that China’s economic figures disappoint next week, in order to make the metal look like an attractive investment.
 
Stock of the week: Barnes & Noble
After announcing its Q2 2015 earnings release on Thursday, share prices for Barnes & Noble fell by 5.5%, as the company bought out Microsoft’s share of the e-book reader Nook. Nook’s sales have been dismal recently, to the news that Barnes & Noble are further entangling themselves with the failing device scared off investors following the announcement.

Economic Diary:

 

Monday:

Tentative – CNY Trade Balance

All Day – EUR Eurogroup Meetings

7.00am – EUR German Industrial Production m/m

 

Tuesday:

7.00am – EUR German Trade Balance

9.30am – GBP Manufacturing Production m/m

3.00pm – GBP NIESR GDP Estimate

3.00pm – USD JOLTS Job Openings

11.50pm – JPY BSI Manufacturing Index

 

Wednesday:

1.30am – CNY CPI y/y

1.30am – CNY PPI y/y

9.30am – GBP Trade Balance

3.30pm – USD Crude Oil Inventories

11.50pm – JPY Core Machinery Orders m/m

 

Thursday:

7.00am – EUR German Final CPI m/m

10.15am – EUR Targeted LTRO

1.30pm – USD Core Retail Sales m/m

1.30pm – USD Retail Sales m/m

1.30pm – USD Unemployment Claims

 

Friday:

5.30am – CNY Industrial Production y/y

10.00am – EUR Industrial Production m/m

1.30pm – USD PPI m/m

1.30pm – USD Core PPI m/m

2.55pm – USD Prelim UoM Consumer Sentiment

 

Earnings releases:

 

Monday:

McDonald’s Corp – November 2014 Sales Release

 

Tuesday:

ASOS PLC – Q1 2015 Trading Statement Release

iomart group PLC – Half Year 2014 Earnings Release

Krispy Kreme Doughnuts Inc – Q3 2015 Earnings Release

HD Supply Holdings Inc – Q3 2014 Earnings Release

 

Wednesday:

Micro Focus International PLC – Half Year 2014 Earnings Release

Toll Brothers Inc – Q4 2014 Earnings Release

Costco Wholesale Corp – Q1 2015 Earnings Release

 

Thursday:

SuperGroup PLC – Half Year 2014 Earnings Release

Sports Direct International PLC – Half Year 2014 Earnings Release