With the markets finding themselves at an interesting place regarding the coronavirus outbreak, will it remain the dominant driver of trading this week?
US: Dow Jones flirting with all-time highs
Investors are clearly very keen to keep driving global indices higher, often putting their fingers in their ears in order to focus on the positive. The Dow Jones, after all, is back to flirting with all-time highs despite it being unclear at this point how badly the Chinese economy will be affected.
S&P Global Ratings has the superpower’s GDP falling to 5% – and that’s for the year, not just the first quarter. For context, they were previously forecasting growth of 5.7%. One of the big questions around all this is how the markets will actually react when those figures start to come out – as in, will investors be sufficiently forewarned to avoid mass panic?
A real game-changer could be good news regarding the remdesivir medicine made by Gilead. China began enrolling patients in a clinical trial of the drug on Thursday, so any early word on how effective it is at treating the illness might be the thing that allows a market rebound to continue.
Looking at the US economic calendar, it is hard to see anything challenging the coronavirus for top billing. The latest CPI figures arrive on Thursday, the first since the Federal Reserve reupped its commitment to 2% inflation. Friday, meanwhile, has the retail sales, import prices, industrial production and preliminary UoM consumer sentiment numbers.
Though the messy Iowa caucus didn’t make much of an impact on the markets, investors would still do well to keep an eye on the results of Tuesday’s New Hampshire primary, an event that should hopefully provide a bit more clarity as to who will be facing Donald Trump in November.
UK: Pound set for a data workout
While the commodity-heavy FTSE is for better or worse going to be preoccupied with the coronavirus situation, the pound is all set for a data workout on Tuesday.
The 1st glimpse preliminary Q4 GDP reading, covering a period that was dominated with Brexit and election uncertainty, will likely show the economy contracted by 0.1% across the quarter. That number is joined by the monthly growth figure, alongside the manufacturing and industrial production numbers.
UK: Stocks to Watch
As for the corporate calendar, it’s pretty stacked, at least in the second half of the week. Sector-outperforming retailer Dunelm’s half year results arrive on Wednesday, followed by full year updates from Barclays, Centrica and Coca-Cola HBC on Thursday, and reports from AstraZeneca and RBS on Friday.
Eurozone: DAX eyeing record peak
Likely focused on the same macro-issues as the rest of the markets – not that that has stopped the DAX from eyeing its own record peak – the Eurozone indices have a steady stream of data to process this week.
The Sentix investor confidence number is on Monday, with the EU economic forecasts on Tuesday, region-wide industrial production on Wednesday, German inflation on Thursday and German and Eurozone-wide GDP on Friday.
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