News & Analysis

Week Ahead – All Eyes on the UK Parliament Vote

December 10, 2018

Market Overview – Global Assets Sell-Off

Investors had faced a global share market sell-off last week. The markets are in turmoil, and there are major red flags which are hard to ignore:

Bond markets and the inverted yield curve
A rout in technology stocks
A massive sell-off in the oil markets

There were many talks about a recession and volatility was definitely on the table. Fundamentals are weak, and trade and geopolitics are further adding uncertainties in the financial markets.

Week Ahead – All eyes on UK Parliament Vote

Market participants will stay busy with trade and geopolitical developments together with some key economic data releases. As we go deeper into the last month of the year, volatility in the markets may persist while liquidity will likely continue to drain.

UK Parliament Vote- Brexit

The vote will probably be the most significant event of the week. After so many negotiations, we will see whether the UK will move ahead or remain marred by Brexit uncertainties. Theresa May fiercely defended her proposal over the last couple of days. It’s been one of the most challenging past few weeks for the UK, given the current political instability. Sterling pairs will be worth watching ahead of the vote on the 11^th of December 2018. In addition to the vote, GDP and jobs reports scheduled on Monday and Tuesday will be top-tier indicators for the Sterling traders. The fresh figures will provide more insights into the UK economy and the effects of Brexit.

Any missed in estimates may weigh heavily on the Pound while gains will likely be capped due to the vote.

ECB Interest Rate Decision

In the Eurozone area, the ECB interest rate decision and monetary policy statement on Thursday will stand out. The ECB plans to halt its quantitative easing programme by the end of the year, and the meeting will probably confirm this move. On the data front, the figures were on the weaker side, and the markets will be looking for comments on the disappointing economic data. Will the ECB be more pessimistic? Will they downgrade forecasts? The comments may help investors perceive whether or not the interest rate move will be pushed further back.

The tone and language used at this meeting will be significant in determining the direction of the Euro.

US Data

The CPI and Retail Sales figures will be critical for the greenback this week as the economic data will feed into the “wait and see” approach” recently adopted by the Fed members. Retail Sales will also include the Black Friday sales figures which will help track consumer spending. The Fed’s rate hike decision is looming, and we are expecting this week’s input to provide some guidance ahead of the interest rate decision.

Commodities Markets

An oil supply glut, lower global demand and a rise in US Shale Production were forcing the OPEC and non-OPEC members to decide on the production cuts. Oil prices rose upon the announcement of a production cut of more than one million barrels per day from major oil producers. The markets are now reassured that the production cuts will help control the supply side. The oil reports this week will provide fresh inputs on the oil inventories and the US shale production.

Tuesday, 11 Dec 2018 Indicative Index Dividends ^{Dividends are in Points}
ASX200	WS30	US500	US2000	NDX100	CAC40	STOXX50
0.229	0	0.133	0.049	0	0	0
ESP35	ITA40	FTSE100	DAX30	HK50	JP225	INDIA50
0	0	0	0	0	0	0