Weekly Market Review

29-03-2016

Storm Katie lashed the UK over the weekend, causing widespread damage and cutting power to tens of thousands of homes. In Lahore, Pakistan, a Taliban suicide bomber slaughtered 70 people and maimed hundreds more in an attack on a funfair, the largest such atrocity in Pakistan this year. Pakistani Prime Minister Nawaz Sharif is coming under increasing pressure to deploy the army against militants in the eastern province of Punjab.


Last week, Belgium was also struck by a guerrilla group hiding among its own people. Islamic State bombers attacked the airport and metro in Brussels, killing 35 and injuring about 300.  The blight of terrorism has added a visceral edge to the Continent’s identity struggle, with fascist political parties gaining ground. How this type of sentiment will affect the UK’s June referendum on its EU membership is hard to determine.

 

Across the Atlantic, Republican nominee-in-waiting Donald Trump has warned his countrymen that the ‘Old World’ is a dangerous place and urged them not to travel there.

 

As we take stock of the first quarter of this year, it has been decidedly downbeat. Politics and terror have cast a pall over the opening stage of 2016, and stock markets – a measure of aggregate global confidence in the future – has been miserable as well. However, most markets have bounced back somewhat after a rocky January and February.


The S&P 500 is up 5.4% so far this month in local currency price terms; the FTSE All-Share has eked out a 0.3% rise; the Topix has increased 6.5%; and the Euro Stoxx is up 1.9% during that period. These recoveries have been helped by the European Central Bank’s further stimulus and a rising oil price. 

 

As we enter spring, the tone of markets and economies will be set predominantly by the US Federal Reserve. The world’s most powerful central bank has shown itself to be cagey about raising its interest rates too quickly and highly wedded to economic data. The next hike will probably be in June at the earliest, but the path ahead could become clearer after this week’s data. US consumer confidence numbers are due today, European industrial and services confidence figures come out tomorrow, while the Chicago Purchasing Managers Index and European inflation numbers are released on Thursday. However, as always, eyes will be fixated on the US nonfarm payrolls numbers on Friday. Adding a bit of colour ahead of these numbers, Fed chair Janet Yellen will address the New York Economics Club later today. 

 

Bonds

UK 10-Year yield @ 1.46%

US 10-Year yield @ 1.90%

German 10-Year yield @ 0.18%

Italy 10 Year yield @ 1.30%

Spain 10 Year yield @ 1.54%


Economic data and companies reporting for week ending 1st April 2016


Tuesday 29 March

US: S&P/Case-Shiller Home Price Index (Jan); Consumer Confidence Index (Mar); Fed's Williams Speaks in Singapore.

EU: M3 Money Supply (Feb); ITA: Consumer Confidence/Business Confidence/ Economic Sentiment (Mar); GER: Retail Sales (Feb).

Preliminary results: Polymetal.

 

Wednesday 30 March

UK: GfK Consumer Confidence (Mar).

US: ADP Employment Change (Mar).

EU: Economic/Industrial/Services Confidence (Mar); Business Climate Indicator (Mar); GER: CPI (Mar).      

 

Thursday 31 March

UK: Net Consumer Credit (Feb); Net Lending Secured on Dwellings (Feb); M4 Money Supply (Feb); GDP (Q4).

US: Initial Jobless Claims (26-Mar); ISM Milwaukee (Mar); Chicago Purchasing Manager (Mar).

EU: CPI (Mar); FRA: PPI (Feb); CPI (Mar); SPA: Retail Sales (Feb); CPI (Mar); Current Account Balance (Jan); ITA: CPI (Mar); PPI (Feb).

Full-year results: Globaltrans.

 

Friday 1 April

UK: PMI Manufacturing (Mar).

US: Change in Nonfarm Payrolls (Mar); Average Hourly Earnings (Mar); PMI Manufacturing (Mar); ISM Manufacturing/Prices Paid (Mar); Construction Spending (Feb); University of Michigan Sentiment (Mar); Total Vehicle Sales (Mar); Fed's Mester Speaks in New York.

EU: PMI Manufacturing (Mar); Unemployment Rate (Feb); SPA: PMI Manufacturing (Mar); ITA: PMI Manufacturing (Mar); Unemployment Rate (Feb); FRA: PMI Manufacturing (Mar); GER: PMI Manufacturing (Mar).

 

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