With the market’s mood darkening, will the Bank of England step in and give UK stocks a boost this week?
UK: Asset purchase programme set to continue
While the central bank continues to mull over the prospect of negative interest rates, the expectation is that Andrew Bailey’s Bank of England will expand its asset purchase programme.
Back in March it pumped £200 billion into the bond-buying scheme. But with most of that now spent, it seems that Threadneedle Street feels it is time for another injection. After all, the OECD has said that the UK is going to be the worst hit ‘developed’ nation when it comes to a covid-19 recession.
Investors will also be keeping an idea on the voting patterns of the MPC, namely whether Thursday’s interest rates decision is unanimous.
Beyond the BoE, it is a stacked week for UK data. On Tuesday the country will finally get a jobs report that more accurately reflects the impact of the pandemic. The unemployment rate, which sat at 3.9% for the 3 months to March, will take April into account – i.e. the first full month under lockdown. The same goes for the average earnings index.
As for the monthly claimant count change reading, April’s far worse than forecast 856,500 is the new benchmark heading into the May reveal.
Inflation, which fell to 0.8% last month, comes on Wednesday, followed by the retail sales and public sector net borrowing numbers on Friday.
US: Chinese data to set the tone
The tone of trading for the US, and the rest of the market, may well be set by the China’s data dump that comes early on Monday morning, when the fixed asset investment, industrial production, retail sales and unemployment rate readings are released.
After that the US sees the Empire State manufacturing index on Monday, retail sales and industrial production on Tuesday, building permits and housing starts on Wednesday, jobless claims and the Philly Fed manufacturing index on Thursday, and the current account on Friday.
Eurozone: Region-wide trade balance
There’s plenty for the Eurozone to work with this week. The region-wide trade balance figure is released on Monday, and could prove to be illustrative given the panic caused by the recent German numbers.
Tuesday then sees the ZEW economic sentiment readings joined by the latest German inflation number, while on Wednesday there’s the CPI data for the Eurozone as a whole. Italy produces its trade balance figures on Thursday, followed finally by German PPI on Friday.
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