News & Analysis

Week Ahead – A Goldilocks NFP Report Sets the Tone

October 7, 2019

Week Summary

The US jobs report drove a rally in global stocks and are likely to set a positive tone for the Asian markets on Monday. The Unemployment Rate fell to 3.5% in September which is the lowest level seen in five decades. The Nonfarm payrolls numbers came below expectations at 136K, but the numbers were not too alarming.

Many dubbed the numbers as “goldilocks” as NFP confirmed the slower growth which was enough to push global equities higher without fuelling recession fears.

Week Ahead

October is so far lived up to its reputation of being the most volatile month. Even though the NFP helped markets to end a volatile week on a positive note, investors are gearing up to another big week dominated by politics and central bank events that can bring more volatility.

China Returns – Trade Talks

China will return from the Golden Week on Tuesday. Investors kick off the week with headlines that China may be increasingly reluctant to agree to a broad deal ahead of talks with the US. Ahead of the trade talks that are scheduled to resume later this week, China’s Vice Premier looks set to refrain from commitments on reforming Chinese industrial policy or the government subsidies.

The impeachment inquiry on President Trump could be seen as an advantage for China. However, China is also facing its own escalating political crisis in Hong Kong. The discussions on the industrial policy will determine how trade negotiations will progress in the near term.

Investors should also keep track of any developments on discussions on potential curbs on the US investments in China.

Central Banks

The Federal Reserve

The FOMC minutes scheduled to be released on Wednesday generally gathers much attention as it is an interesting reading about the Fed’s thinking in its last meeting. However, last week economic data will have already raised expectations of a rate cut, and even if the FOMC minutes look more hawkish, the dollar could rise temporarily.

The start of the week will be dominated with Fed speeches, and economic data releases – Jobless Claims, CPI and Consumer Sentiment Index on Thursday and Friday will help investors to assess the slow growth.

The European Central Bank

Investors will get the minutes for the September meeting where we saw the ECB restarting the stimulus program to fight a recession. It will help the markets to look at the discussions and different views on future stimulus packages.

Brexit

The clock is ticking for Brexit and we expect talks to proceed swiftly in the coming days as there were no negotiations over the weekend. The European Union will decide at the end of next week whether a Brexit deal is going to be possible. Even though Mr Johnson is still keen to avoid a delay to Brexit, a law requires the Prime Minister to request an extension if no deal is agreed by 19 October.

The prospects of a Brexit deal have faded as the new proposals did not convince the EU. Market participants will likely keep monitoring the developments and talks ahead of 19 October.

Tuesday, 08 October 2019 Indicative Index Dividends ^{Dividends are in Points}
ASX200	WS30	US500	US2000	NDX100	CAC40	STOXX50
0.09	0	0.073	0.033	0	0	0
ESP35	ITA40	FTSE100	DAX30	HK50	JP225	INDIA50
0	0	0	0	0	0	0

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