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Weekly Market Report

10 Nov 2020

09 November 2020


The Market Last Week

Global equities ended firmer last week, amid optimism surrounding the US presidential election results.

UK Markets ended the week in positive territory, after the Bank of England (BoE) boosted its bond-buying programme to support the economy.

UK’s Halifax house price index advanced at its fastest pace since mid-2016 in October.

In the UK, the final Markit manufacturing PMI dropped in October.

UK’s Markit construction activity expanded at its slowest pace in five months in October.

In the UK, the final Markit services PMI fell to a 4-month low in October.

BoE Governor Andrew Bailey, in his speech, indicated that the central bank is ready to inject more stimulus into the economy, if the outlook for inflation weakens and stated that the central bank will “take whatever additional action is necessary” to achieve its 2% inflation target.

European Markets ended the week on a positive footing, following upbeat corporate earnings reports.

Eurozone’s manufacturing activity strengthened in October.

In the Eurozone, the producer price index (PPI) dropped in line with market expectation in September.

Eurozone’s final Markit services PMI declined in October.

In the Eurozone, retail sales dropped more-than-expected in September.

Germany’s final Markit manufacturing PMI advanced in October.

In Germany, the final Markit services PMI fell in October.

Germany’s factory orders rose less than market anticipations in September.

In Germany, industrial production advanced less-than-expected in September.

US Markets ended the week in green, amid growing optimism for a larger stimulus package.

US final Markit manufacturing PMI rose more than market forecast in October.

The ISM manufacturing index advanced more than market anticipations in October.

US non-farm payrolls increased by more than expected in October.

Consumer credit climbed in October.

US factory orders grew in September.

Durable goods orders increased in September.

The final Markit services PMI rose in October.

The unemployment rate fell more than market forecast in October.

The MBA mortgage applications advanced on a weekly basis in the week ended 30 October 2020.

US private sector employment rose less than market consensus in September.

Trade deficit narrowed less than market anticipations in September.

The ISM services index eased in October.

US initial jobless claims declined less than market expectations in the week ended 30 October 2020.

US average hourly earnings rose less-than-expected in October.

Construction spending increased less-than-anticipated in September.

The US Federal Reserve (Fed), in its latest monetary policy decision, kept its key interest rate unchanged at 0.25%, as widely expected. Further, the central bank indicated that economic activity and employment have continued to recover but remain well below pre-pandemic levels. Additionally, the Fed reiterated that it expects rates to remain unchanged until it achieves consistent levels of labour market conditions and inflation target of 2.0%.

Asian Markets ended firmer last week, tracking gains in their US counterparts.

Australia’s AiG performance of construction index advanced in October.

In Australia, seasonally adjusted retail sales dropped less than market forecast in September.

Australia’s service sector activity expanded in October.

In Australia, the Commonwealth Bank services PMI dropped in October.

Australia’s trade surplus narrowed on a monthly basis in September.

China’s Caixin services PMI climbed in October.

China trade surplus widened more than market anticipation in October.

In Japan, the Jibun Bank services PMI advanced in October.

Japan’s overall household spending dropped less-than-anticipated on an annual basis in September.

The Reserve Bank of Australia (RBA), in its latest monetary policy meeting, slashed its key interest rate from 0.25% to 0.10%, as widely expected. Further, the central bank announced the purchase $100 billion of 5-10 year government bonds over the next six months.

The Bank of Japan (BoJ) in its latest monetary policy meeting minutes, called for deeper scrutiny on how to address the fallout from the coronavirus pandemic as the economic outlook remained highly uncertain. Moreover, board members agreed that maintaining the current ultra-loose monetary policy was sufficient for now to curb the economic impact of the pandemic.

The Reserve Bank of Australia (RBA), in its latest monetary policy statement, signalled that it is not considering a further reduction in interest rates. On the outlook front, the central bank expects a large shortfall in economy activity and a slowdown in recovery. Further, the RBA warned that the unemployment rate is likely to increase in the near-term.


Currency Update

The EUR ended firmer against the USD last week, after manufacturing acitivity in the Eurozone strengthened in October.
The British Pound ended stronger against the greenback last week, as the BoE extended its quantitative easing programme.
The US Dollar ended weaker against its major counterparts last week, as a contentious US presidential election diminished hopes for a large stimulus to support the economy.


Bank of England (BoE) downgrades 2021 growth outlook

The BoE, in its latest monetary policy decision, kept its benchmark interest rate unchanged at 0.1% and extended its bond purchase programme by £150 billion in a bid to support the economy. Further, the central bank downgraded its economic outlook and now expects gross domestic product (GDP) to grow 7.25% in 2021 revised down from 9.0% projected in August. However, the outlook for 2022 was revised up to 6.25% from 3.50%.


The Week Ahead

Going ahead this week, investors will keep a tab on the US JOLTs job openings, the consumer price index (CPI), initial jobless claims, the producer price index (PPI) and the Michigan consumer sentiment index for further direction. Additionally, Eurozone’s Sentix investor confidence index, the ZEW economic sentiment indicator, industrial production, trade balance, gross domestic product (GDP) along with Germany’s trade balance, current account balance, the ZEW indices and the CPI will keep investors on their toes. Also, UK’s BRC like-for-like retail sales, claimant count change, the ILO unemployment rate, average hourly earnings including bonus, the NIESR GDP estimate, the RICS house price index, total trade balance, manufacturing production, industrial production, GDP and the Bank of England Governor Andrew Bailey’s speech would garner significant amount of investor attention.


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