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The Market Last Week

Global equities ended stronger last week, buoyed by upbeat business outlook and robust corporate earnings. UK markets ended the week on a positive footing, amid gains in housebuilding sector stocks. On the data front, UK’s gross domestic product (GDP) advanced at par with market expectations on a quarterly basis in the third quarter of 2017. Further, the CBI industrial trends survey orders rose more-than-anticipated in November. Meanwhile, BBA mortgage approvals dropped more-than- expected to its lowest level in 13 months in October. Moreover, the nation’s public sector net borrowings posted a wider-than-expected deficit in October. European markets ended the week in positive territory, following robust economic releases in the single currency bloc. On the macro front, Eurozone’s flash Markit manufacturing PMI surprisingly advanced in November. Additionally, the preliminary Markit services PMI rose higher than market forecast in the same month. Furthermore, Germany’s preliminary Markit manufacturing PMI recorded an unexpected rise in November. Additionally, the nation’s Ifo business climate index and the Ifo business expectations index unexpectedly rose in November. US markets ended the week in green, boosted by gains in technology sector stocks. In economic news, the US final Michigan consumer confidence index rose at a stronger-than-expected pace in November. In contrast, the flash durable goods orders unexpectedly fell in October. Further, the preliminary Markit manufacturing and services PMI unexpectedly dropped in November. Asian markets closed mostly firmer last week. Data indicated that Japan’s preliminary Nikkei manufacturing PMI expanded in November, notching its highest level since March 2014.

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Currency Update

The Euro ended stronger against the greenback, amid optimism over Europe's growth outlook and upbeat economic releases in the region. The European Central Bank’s(ECB) October meeting minutes indicated that policymakers shared the view on extending the central bank’s quantitative easing (QE) programme but were divided over whether to announce an end-date as some feared that failure to put an end-date to QE might generate expectations of further extensions. The GBP ended firmer against the USD. Meanwhile, UK Chancellor of the Exchequer, Philip Hammond, in his first Autumn Statement indicated that the Office for Budget Responsibility (OBR) expects the British economy to grow by 1.5% in 2017 and 1.4% in 2018, down from a previous estimate of 2.0% and 1.6%, respectively and anticipates that the nation will need to borrow sharply over the coming years. The US Dollar ended weaker against its major peers, after the Federal Reserve’s (Fed) November meeting minutes revealed that officials were worried about weak US inflation.

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Fed minutes indicated “near term” rate hike, policymakers uncertain over inflation outlook

Going ahead this week, investors will keep an eye on the OECD economic outlook and the US Fed Chair, Janet Yellen’s speech for further direction. On the data front, the US GDP figures, the ISM manufacturing PMI and advance goods trade balance data along with China’s manufacturing PMI, Eurozone and German CPI data will be on investors’ radar.

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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 ECB’s monetary policy decision will be on investors’ radar.

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