NEW DELHI: What a week it was! The domestic equity market is getting exciting by the day as it approaches the year-end. The benchmark indices surged above their crucial resistance levels and ignored much of the bad news such as a status-quo in money policy by the Reserve Bank of India.The Nifty50 rose 2.1 per cent while the S&P BSE Sensex rallied 1.9 per cent for the week ended December 9, 2016. Midcap stocks rallied the most as the S&P BSE Midcap index surged 2.7 per cent. "The market gained over two per cent in an eventful week, providing the much-needed respite to participants.
The key economic release this week is the employment report on Friday, which as Janet Yellen noted in her speech on Friday, is the only economic event (together perhaps with the CPI report on April 15), that could potentially derail a now practically guaranteed rate hike.
The week ahead turns attention squarely towards the US, with the market's reaction to the second presidential debate on Sunday the key focus during the Columbus Day US session. The other main event will be the September FOMC Minutes, following US data and an employment report that has left many banks comfortable with a December Fed hike. The minutes are likely to reveal a heated debate about the appropriate course of policy, revealing a discussion about the costs and benefits of keeping rates at the current low levels, highlighting the growing divergence of views within the committee.
Looking at the week ahead, in Europe the focus will likely be on the flash August PMI readings. The readings for the Euro area, Germany and France are due on Thursday. Markets are expecting a modest 0.4pt decline for the Euro area composite PMI but we suspect plenty of focus will be on the flash manufacturing PMI reading for Germany given the softening data momentum over there. The other notable European releases this week also include the Euroarea trade balance today, UK inflation tomorrow, and German PPI on Wednesday.
The spotlight turns to US data and Fed speakers ahead of the Fed blackout period this week. The BoE and SNB meet to decide policy but consensus expect no change from either. Elsewhere we get inflation data from the US, UK, Sweden & EZ (F), Q2 GDP from NZ & SW and labor market data from the UK & AU.
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Starting with the economic data, it’s a super quiet start to the week today outside of the Fed speak detailed below with no real significant data due to be released.
Quickly looking at the potential market moving events this week, US payrolls on Friday will be the clear focus. In terms of expectations, our US colleagues are expecting a +225k print which matches the current Bloomberg consensus, while they expect the unemployment rate to drop one-tenth to 5.4%. Elsewhere, Thursday’s UK Election will be closely followed while Greece will once again be front and center.
OTTAWA — Canada’s labour market will emerge from the shadow of the United States next week, at least temporarily. But the outlook for job creation here will remain cloudy at best.
Most analysts are forecasting another month of moderate hiring in June, with anywhere between 22,000 and 30,000 positions being created. The latest employment tally from Statistics Canada, to be released Friday, will be one of two major data releases in the coming days.
Last week it was all about the ECB, which disappointed on hopes of further rate cuts (leading to the Thursday selloff) but delivered on the delayed realization that the ECB is now greenlighting a tsunami in buybacks (leading to the Friday market surge). This week it is once again all about central banks, only this time instead of stimulus, the risk is to the downside, with the BOJ expected to do nothing at all after the January NIRP fiasco, while the "data dependent" Fed will - if anything - hint at further hawkishness now that the S&P is back over 2,000.
It's a busy week for the market, and not to mention the Dow Jones-dependent Fed, which will have to parse through reports on Chicago PMI, Construction Spending, ISM (Mfg and Services), ADP, Productivity and Labor Costs, Factory Orders, Trade Balance, and the weekly highlight: Friday's Jobs reports.