This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Lingering on our minds will also be the likelihood of a US government shutdown with the December 8 deadline fast approaching.
By means of leads, we have certainly seen a packed week filled with events that find their impact stretching across markets. The notable movement had been the divergence between US and Asian equity markets. While the former charged on, aided by US tax reform and OPEC extension optimism, Asian markets retreated on a broad level. Flailing Chinese markets were seen infecting regional performance at the start of the week as the likes of the CSI 300 led week-to-date declines at 2.6%. Meanwhile, the dent in IT stocks which had also affected US markets took a greater toll upon Asia, sending prices tumbling. Ahead of Friday’s US session, the tax vote's outcome is one that remains to be seen.
US data in focus
Against soft regional leads, investors are likely to keep their eyes peeled for the performance of the US market. Playing a key role in guiding market performance next week will likely be the set of economic data due. Specifically, November’s non-farm payrolls (NFP), unemployment rate and average hourly earnings are the ones to track on Friday. Economists have penned in broadly positive expectations for this month’s iteration with a robust addition of 210k jobs, multi-year low unemployment of 4.1% and even a month-on-month acceleration in average hourly earnings growth. This would reinforce outgoing Fed Chair Yellen’s recent testimony on a labour market nearing full employment while average hourly earnings will be a key component in influencing inflation expectations.
Do note that Friday brings alongside the preliminary reading of December’s University of Michigan sentiment and recent rosy conditions may find a higher reading. This could contribute to near term gains for equities and the US dollar alike.
A note of caution may however be extended to politics seeing the December 8 deadline for the passing of a spending bill by Congress looming. On a broad level, the market certainly does not appear to entertain the likelihood that US Republicans, averse towards such disruptions, would allow a shutdown but President Donald Trump’s latest words does incite jitters. Do monitor this item in the coming week for impact on a broad market level.
In addition to a charged up data week for the US, the Asia Pacific region will find a rather packed week lying ahead. Tier-1 data due includes Q3 GDP figures from Australia and Japan and inflation updates from Indonesia, Taiwan and Philippines. The items that will likely have the most widespread impact may remain figures out of China. November’s trade conditions will be released on Friday with a market consensus for lower exports and imports growth. PMI figures which had led November’s releases with an upside surprise had been a positive sign for the resilient recovery of the economy. Additionally, CPI and PPI updates will follow after market’s close on Saturday.
Central banks in Australia and India will also announce their monetary policy decisions next week, eyeing a change for the latter. For the local Singapore market, the first of November’s data arrives with the Purchasing Managers Index on Monday after the market closes.