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Weekly Market Report

27 Jan 2020

27 January 2020

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The Market Last Week

Global equities ended weaker last week, after the International Monetary Fund (IMF) lowered global growth forecast for 2020 and 2021.


UK Markets ended the week in negative territory, as risk appetite amongst investors waned, amid fears of outbreak of the deadly coronavirus and its impact on the global economy.

UK’s public sector net borrowing increased less than market anticipations in December.

The ILO unemployment rate remained unchanged at its lowest level in 45 years in the September-November 2019 period.

Claimant count rate recorded a rise in December.

Average earnings increased more than market expectations on an annual basis in the September-November 2019 period.

The Markit manufacturing PMI climbed more-than-anticipated in January.

The Markit services PMI jumped more than market forecast for the first time since August 2019 in January.




European Markets ended mostly lower in the week, after the IMF slashed the Eurozone’s growth forecast for this year and the next.

Eurozone’s Markit services PMI recorded a drop in January.

The Markit manufacturing PMI in the Eurozone rose more than market forecast in January.

Eurozone’s ZEW survey economic sentiment index improved more than market forecast in January.

The consumer confidence index in the Eurozone remained unchanged in January.

Germany’s producer price index dropped less than market expectations on an annual basis in December.

Germany’s Markit manufacturing PMI climbed more than market forecast in January.

The Markit services PMI in Germany jumped more than market anticipations in January.

Germany’s ZEW survey current situation index rose more than market expectations in January.

The ZEW survey economic sentiment index in Germany climbed more-than-anticipated at its highest level since July 2015 in January.

The IMF, in its recent update on the world economic outlook, lowered its global economic growth forecasts to 2.9% and 3.3% for both, 2019 and 2020, respectively, amid rising global trade tensions. Moreover, the Eurozone’s growth forecast was lowered to 1.3% for 2020, largely due to a manufacturing contraction in Germany and decelerating domestic demand in Spain. However, the IMF has upgraded its growth forecast for China to 6.0% for 2020, as the US trade deal included a partial tariff reduction and cancelled tariffs on Chinese consumer goods that had been scheduled for December.




US Markets ended the week in red, amid dismal corporate earnings report and ongoing tensions over the spread of coronavirus in China.

The US Markit manufacturing PMI dropped to its lowest level in three months in January.

The Chicago Fed National activity index fell more than market expectations in December.

The Markit services PMI jumped more than market forecast in January.

Existing home sales climbed to its highest level since February 2018 on a monthly basis in November.

Initial jobless claims rose less than market forecast in the week ended 17 January 2020.

The Kansas Fed Manufacturing Activity index dropped less than market anticipations in January.

The MBA mortgage applications dropped in the week ended 17 January 2020.




Asian Markets ended weaker last week, tracking losses in their US counterparts.

Australia’s consumer inflation expectations jumped more than market anticipations in January.

Unemployment rate in Australia unexpectedly fell in December.

Japan’s trade deficit widened more than market expectations for the second consecutive month in December.

The leading economic index in Japan fell more-than-anticipated in November.

Japan’s all industry activity index rebounded on a monthly basis in November.

Consumer price inflation in Japan rose more than market forecast on a yearly basis in December.

Japan’s manufacturing PMI climbed more-than-expected in January.

The Bank of Japan (BoJ), in its latest monetary policy meeting, kept its benchmark interest rate steady at -0.1%, and maintained its yield target for 10-year Japanese government bonds at around 0.0%, as widely expected. Moreover, the central bank raised its growth forecast for the fiscal 2020 to 0.9% from 0.7%. Likewise, the projection for 2021 was lifted to 1.1% from 1.0%.

The BoJ, in its December monetary policy meeting minutes, reported that the policymakers warned that global uncertainties and last year’s tax hike might have dented capital spending and inflation expectations. Further, a few officials dicussed over concern that households’ income might fall as manufacturers, hit by slowing global demand and the fallout from the US-China trade war, could slash winter bonus payments. Further, the BoJ Governor, Haruhiko Kuroda, warned that risks to Japan's economic recovery remained high.




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Currency Update

The EUR ended lower against the USD last week, after data indicated that the services activity in the Eurozone declined.
The British Pound ended stronger against the greenback in the previous week, after data showed a jump in, both, UK employment and wages in December.
The US Dollar ended mostly stronger against its major counterparts last week, after the US existing home sales jumped to its highest level in 2 years.


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ECB kept key interest rate unchanged and launched a strategic review of its inflation goal

The European Central Bank (ECB), at its latest monetary policy meeting, kept its benchmark interest rate unchanged at 0.0% and maintained its commitment to make a purchase of $22.80 billion a month in bonds, as widely expected. Meanwhile, the central bank launched a strategic review of its inflation goal and tools. The officials indicated that interest rates would remain at present or lower levels until there are solid signs that the low inflation is on track to converge with the bank's target of near, but below 2.0%.


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The Week Ahead

Going ahead this week, investors will keep a tab on the Eurozone’s gross domestic product (GDP), consumer price index (CPI), consumer confidence index and unemployment rate along with Germany’s CPI, the GfK consumer confidence index, unemployment rate and retail sales data for further direction. Also, the US FOMC meeting minutes, GDP, consumer confidence index, trade balance, personal income and spending data coupled with the Bank of England interest rate decision, the UK’s BBA mortgage approvals, consumer credit, and the GfK consumer confidence index will be on investors’ radar.


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