By Deepta Bolaky
 @DeeptaGOMarkets

The same geopolitical and trade themes will likely dominate headlines this week as the markets remained vulnerable to the current headwinds: slower global growth, trade tensions, Brexit, Italian budget woes, the recent signals from the Fed and the rout in the oil markets. This week promises to unfold with heightened volatility as traders return from Thanksgiving holidays to a busier calendar and increasing political challenges.

Equity Markets

Investors are rattled as worries on earnings and growth dampened sentiment. The markets are standing at a critical juncture where there are persistent headwinds that threatened to hit the stock markets. A Thanksgiving thinned session did little to help US stocks which ended in negative territory on Friday. US stocks were dragged by oil prices and the declines in the technology sector, namely- Apple and Amazon after reaching the US1 trillion mark earlier this year, Apple erased more than one-quarter of its value over concerns of iPhone sales.

The markets are trying to come to terms with slower global growth amidst other persisting doubts. The coming weeks might provide a clearer indication of the equity markets in 2019. At the moment, it is increasingly difficult to foresee the path of equities given the panic installed in the markets. Trade tensions have supposedly eased with positive signs from Trump. However, the shift in sentiment is feeble. Traders are hopeful that the G20 summit might be constructive on the trade front which could help to bring some relief to equities.

As the markets effectively manage to rethink the outlook for US growth and the pace of US interest rates, investors will slowly be able to assess and adjust their strategies.

Currencies Markets – EU Brexit Summit

The week will kick off with the continuation of the EU Brexit Summit. While investors are appeased that the 27 leaders of the bloc have endorsed a withdrawal agreement, Theresa May is under pressure as the agreement may not be approved by the House of Commons in London. It is unlikely that there is a Plan B that the EU is willing to consider at this stage.

“It will certainly not be renegotiated, and there will be no further room for manoeuvre.”

The United States

The US dollar made an impressive recovery on Friday amid a risk-off sentiment. The economic calendar is busier this week for the US. We will see a few FOMC speeches on Tuesday followed by GDP, Core PCE and New Home Sales on Wednesday. Traders will monitor inflationary factors that can help them gauge the next move of the Fed. After some dovish statements, the FOMC speeches will be heavily scrutinised for further insights and hints that the markets are looking for.

Europe and the UK- Brexit, EZ Inflation and German IFO stand out

Brexit headlines will continue to flow in at the beginning of the week with the EU Brexit Summit carrying-on through Monday. Reactions were subdued following the endorsement of the EU leaders on the divorce deal as there are uncertainties of what will happen if parliament rejects May’s Brexit deal. The Sterling pairs and the shared currency will remain primarily driven by the current political risks.

On the data front, the release of the German IFO on Monday will be important after the decline in the business climate in October. The most significant data will be the flash EZ inflation figures in November. Core and headline inflation have been at its highest rate in years. However, headline inflation was primarily driven by rising energy prices. Therefore, the recent fall in energy prices is expecting to drag headline inflation lower at 2.1% compared to 2.2%. Core inflation is expected to remain at the same level at 1.1%. Other notable events will be the ECB speeches on Monday and Tuesday followed by the 10-yr bond auction, Consumer Confidence, Unemployment Rate, CPI figures and Retail Sales in Germany scheduled across the week. In the Eurozone area, we also have the Unemployment Rate coming up on Friday.

In the UK, the markets will see the BOE Governor Carney Speech on Monday followed by the Financial Stability Report and Bank Stress Test on Wednesday. The week will end with the Consumer Confidence survey.

Asia & Australia

There is little of note on the economic calendar for the Aussie dollar. The week started with an RBA speech. The next important event will be the New Home Sales and Private Capital expenditure. The local currency will be left mostly tied to the broader sentiment of the markets. In Asia, Japan will publish a series of economic data across the week starting with Coincident and leading economic Index followed by bond & stock investment, Retail Trade, Large Retailer’s Sales and BOJ Member Masai Speech on Thursday. On Friday, CPI figures, Unemployment Rate and Jobs/Applicants Ratio will be released.

Commodity Markets

Oil price concerns will be the continuing dominating factor in the commodities markets this week. Is the sell-off exaggerated? Well, the rising US shale production, increasing output from Saudi Arabia, mounting inventories and faltering demand growth are not reassuring the markets. Sellers are taking control due to the bearish fundamentals. Markets participants are waiting for a robust bullish catalyst to drive prices higher. At the moment, bulls are pinning their hopes on the production cut.

Are we going to see some sidelines talks at the G20 summit regarding the production cut?

Cryptocurrency Markets

The cryptocurrency markets might be set on another week of decline. Bitcoin, the world’s best-known digital coin dropped below the $4,000 over reports that the major cryptocurrency exchange Coinbase has to face a class-action lawsuit brought by traders on the basis of fraudulent practices.

Tuesday, 27 Nov 2018 Indicative Index Dividends Dividends are in Points
ASX200	WS30	US500	US2000	NDX100	CAC40	STOXX50
0	0	0.024	0.052	0	0	0.949
ESP35	ITA40	FTSE100	DAX30	HK50	JP225	INDIA50
0	0	0	0	8.423	0	0

 

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