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Week Ahead: healing China, shaky America, frail Europe
Our preview of the main financial events of the coming week.
China, which has so often been a source of anxiety for investors over the past year, should be responsible for an encouraging start to the coming week.
An array of data on inflation, exports, industrial production and investment is due over the weekend, which is broadly expected to show the Chinese economy continued to stabilise in November.
The US could instead be the source of most angst in financial markets over the days ahead.
Leaving it ‘til the last minute
Negotiations to see off a ‘fiscal cliff’ in the US threaten to cap any market gains again in the coming week. Legislators, eyeing the Christmas break, will want to get a deal done soon; they theoretically head into recess next Friday. The Washington Post reminds us though that three years ago, the Senate pushed a vote on the president’s health care plan to Christmas Eve.
This uncertainty makes Ben Bernanke’s job no easier. The US Federal Reserve chief – who for months has been urging congress to fix the cliff quickly – meets with other members of the Fed’s FOMC committee next week to decide on their next steps to boost the US economy.
The board is expected to announce a plan to buy more bonds to replace the ‘Operation Twist’ scheme that comes to an end.
Bernanke’s Fed is determined to support the fragile US economic recovery. Clues as to its success will be provided by US economic releases next week, which include reports on retail sales (Thursday), initial jobless claims and industrial production (both Friday).
‘Weak activity is expected to extend into next year,’ European Central Bank chief Mario Draghi said on Thursday of the 17 nation euro-bloc which tipped over into recession in the third quarter. And the main economic reports due over the coming week aren’t likely to convince him otherwise.
Investors await the German ZEW Index, a measure of investor sentiment due on Tuesday, as well as industrial production and PMIs for the euro-area on Wednesday and Friday respectively.
Again there is the recurrent hope that this will be the week when the next tranche of aid to Greece is finally signed-off.
Labouring under the ‘triple dip’ threat
The only major economic data release due is the jobs report on Wednesday, which should hopefully show the UK labour market continues to hold up, at least relative to feeble economic growth.
Mervyn King, the governor of the Bank of England, delivers a speech on Monday where he could provide clues as to the future of the bank’s quantitative easing programme, after the monetary policy committee this week refrained from extending the money printing scheme.
Costa Coffee owner Whitbread (WTB.L) is the only blue chip reporting results next week, with a trading statement on Tuesday.
Of smaller companies though, highlights include trading statements from Asos (ASOS.L) on Tuesday and then Travis Perkins (TPK.L), Carillion (CLLN.L), John Wood Group (WG.L) and Senior (SNR.L) on Wednesday.
Interim results are due from Ashtead (AHT.L) and Carpetright (CATVU.L) on Tuesday, Supergroup (SGP.L), Darty (DRTY.L), Begbies Traynor (BEG.L) and Imagination Technologies (IMG.L) on Wednesday, then Betfair (BETF.L) and Sports Direct (SPD.L) on Thursday.
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- Whitbread PLC (WTB.L)
- ASOS PLC (ASOS.L)
- Travis Perkins PLC (TPK.L)
- Carillion PLC (CLLN.L)
- John Wood Group PLC (WG.L)
- Senior PLC (SNR.L)
- Ashtead Group PLC (AHT.L)
- Carpetright PLC (CATVU.L)
- SuperGroup PLC (SGP.L)
- Darty PLC (DRTY.L)
- Begbies Traynor Group PLC (BEG.L)
- Imagination Technologies Group PLC (IMG.L)
- Betfair Group PLC (BETF.L)
- Sports Direct International PLC (SPD.L)
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by Gavin Lumsden on Dec 19, 2014 at 17:24