The first full week of 2020 brings with it a fair amount of data, the start of the post-Christmas earnings season and some major geopolitical tension.
US: Geopolitical concerns
We are barely into 2020 and already Donald Trump has already sparked a new wave of geopolitical concern. With the markets still riding high following the announcement of the ‘phase one’ trade agreement at the end of 2019 – and the prospect of the deal being signed on January 15th – the President undermined any New Year optimism by killing high profile Iranian general Qassem Soleimani via a drone strike.
Iran promised ‘severe revenge’ in the aftermath of the assassination, causing markets to tumble and oil to surge. Investors, then, will be primed to see how the country retaliates in the coming days and weeks.
Beyond that, there’s also the small matter of the latest nonfarm jobs report on Friday, preceded by services PMIs on both Monday and Tuesday.
UK: FTSE to take a different view on Middle East concerns
Like the Dow Jones et al., the FTSE will be very interested in what happens next between the US and Iran. The UK index is in a slightly different position to its index peers, due to the heavy presence of oil giants BP and Shell in its make-up, and the reaction of Brent Crude to disturbances in the Middle East. Not immune to losses, per se, but with that sector as a mitigating factor.
As for the pound, it has already suffered at the start of 2020. Investors have been processing the prospect of another 12 months dominated by tense, high stakes Brexit negotiations, one that’ll swap the January 31st exit deadline for a December 31st transition period cut-off date.
Data-wise, the services PMI is the only real highlight, arriving on Monday morning after a pair of alarming manufacturing and construction readings.
UK: Corporate Calendar
The week also brings the first real wave of post-Christmas corporate updates, with a wave of retail sector statements. Morrisons is on Tuesday, with Greggs and Sainsbury’s on Wednesday, Card Factory and Dunelm on Thursday, and JD Sports on Friday.
Eurozone: Preoccupied with geopolitical concerns
Similar to elsewhere, the Eurozone may well be preoccupied with geopolitical concerns this week. If not, then there are the services PMIs on Monday, the flash inflation estimates on Tuesday, Germany factory orders on Wednesday, ECB meeting minutes on Thursday and French and Italian industrial production readings on Friday.
