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The Market Last Week

Last week, global equity markets ended in positive territory, after the US Senate approved the budget resolution for financial year 2018 and on the back of upbeat corporate earnings. UK markets ended the week on a firmer footing, buoyed by a weaker British Pound. In economic news, British consumer price inflation advanced as expected in September, hitting a 5-year high level. European markets finished higher for the week, following gains in banking sector stocks. On the data front, Eurozone’s annual consumer price inflation climbed as anticipated in September. US markets closed mostly higher last week, supported by robust corporate updates. On the economic front, industrial production in the US rebounded strongly on a monthly basis in September. Moreover, the number of Americans filling for unemployment benefits for the first time fell more than anticipated for the week ended 13 October 2017, slipping to its lowest reading in 44 years. Asian markets ended mostly in the green last week, with the Nikkei 225 index posting its longest winning rally in more than five decades. In a major development over the weekend, Japan’s snap election saw current Prime Minister, Shinzo Abe’s Liberal Democratic Party and a small coalition partner together securing at least 312 seats in the 465-seat lower house of parliament, thus securing a two-thirds majority. On the data front, the final reading for Japan’s industrial production was revised slightly lower on a yearly basis in August. Further, China’s gross domestic product (GDP) advanced at a slightly slower pace in the third quarter of 2017, albeit met market expectations.

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Currency Update

The US Dollar ended higher against major peers last week, after the US Senate approved a budget blueprint, paving way for the much-anticipated tax overhaul plan which is considered critical to the Republican Party. The Pound ended on a weaker note against the greenback last week, after retail sales growth in the UK advanced less-than-expected on an annual basis in September. The Euro ended lower against the greenback last week, amid ongoing political unrest in the Catalan region of Spain.

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US Senate passes a budget blueprint for fiscal 2018!!!

The Republican-controlled Senate in the US approved a budget measure for the financial year 2018 by a 51-to-49 vote. The US President, Donald Trump’s plan to overhaul the tax code came through a major hurdle as this big decision by the Senate will pave way for the Republican Party to achieve its tax cut plan without support of the Democratic Party. Senator, Rand Paul of Kentucky was the only Republican to oppose the blueprint, objecting to the spending levels provided in the draft. The US President cheered and welcomed the Senate’s decision, while also noted Senator Rand Paul’s objection to the proposal. However, he believed that the Kentucky Senator will eventually support the plan to reduce taxes when it comes up for a vote.

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The Week Ahead

Looking ahead this week, traders will keep an eye on Markit’s survey for manufacturing and services PMIs across the Eurozone and the US for further cues. Further, the US and the UK GDP growth reports for the third quarter along with the European Central Bank’s monetary policy decision will be on investors’ radar.

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