The markets are entering a potentially tricky period, as they come down from the explosive gains made in the wake of the election result and Pfizer vaccine headlines.
US: Will Dow Jones hit a record high?
It is unclear heading into the second half of November which path the Dow Jones will end up taking.
Anxieties surrounding Trump’s bombardment of legal challenges, designed to undermine and overturn the American election, are yet to really grip investors, though in no way can be discounted until the President concedes.
Meanwhile the astounding rally that greeted reports that the BioNTech/Pfizer vaccine is ‘90% effective’ has petered out. However there are other vaccines in the works that could soon update on their interim trial results, including the preparation being developed in Oxford.
And then, as ever, there is covid-19. When there aren’t high-level distractions, like the election or the vaccine, investors are left to reckon with rapidly rising cases, surging deaths and the attendant economic crunch.
This is especially true in the US, which is now seeing daily case numbers above 140,000, and is still without a pandemic stimulus package, something that has been kicked down the road due to the contested election. It means it is likely only a matter of time before investors’ covid-19 concerns reach a fever pitch once again.
As for data, the tone of the week may be set early on with the numbers out of China on Monday. Last month fixed asset investment finally swung into positive territory, to 0.8%, so anything above 1% will be a boost. Industrial production has been adding around one percentage point each month, and last came in at 6.9%, so investors maybe be hoping for 8%-plus. Most importantly, retail sales picked up, climbing from 0.5% to 3.3% – it is vital that the markets continue to see that number grow.
In the US, retail sales are also the focus, with the standard and core readings arriving on Tuesday, after a far better than forecast 1.9% last month. There’s then building permits and housing starts on Wednesday, while the usual jobless claims are joined by the Philly Fed manufacturing index and CB leading index on Thursday.
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UK: Brexit back in focus
For the UK, Brexit should come roaring back into focus this week, with November 19th’s EU summit video conference viewed as the new deadline for a draft deal. And with Boris Johnson’s government internally in bits, the odds of an agreement being reached aren’t looking good.
In terms of data, its slim pickings, though those figures that do come out are notable: inflation, which is sitting at 0.5%, is out on Wednesday, while retail sales, which last came in at 1.5%, arrive on Friday.
UK: Stocks to watch
The corporate calendar also has a few interesting releases, including a likely miserable update from easyJet on Tuesday, Halfords on Wednesday, and Naked Wines and Kingfisher on Thursday.
Alongside a focus on the covid-19 situation across the continent, there’s the ECB financial stability review on Monday, region-wide inflation on Wednesday, the current account reading on Thursday, and the consumer confidence numbers on Friday.
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