The week ahead

A look ahead to the major events, economic releases and company news expected next week.

It has been an odd week – record highs and then a slump for equity indices. However, it seems like markets are stabilising as we head towards the new week, with some better US data helping on the final session of the week.

There was much excitement on Monday as the Dow Jones closed above 16,600, the level that had hindered progress; however, a rapid drop showed that investors are still rather nervous. Meanwhile GBP/USD and EUR/USD both continued to fall, as the dovish perception of the Bank of England and European Central Bank lingered. 

Economic reports

Tuesday

German PPI (April), 7am: German producer prices are forecast to drop by 0.9% year-on-year, the same as in the previous month. Market to watch: EUR/USD

UK CPI (April), 9.30am: Price growth in the UK is expected to accelerate to 1.7% from 1.6%. Market to watch: GBP/USD

Wednesday

Bank of England minutes, 9.30am: No change was announced by the bank at its last meeting, but since then we have had the inflation report that was of a more dovish tone. Watch out for comments on slack in the economy and debate on how strong the economy really is. Market to watch: GBP/USD

UK retail sales (April), 9.30am: Year-on-year sales growth (including cars) is expected to touch 5.1% from 4.2% last month, a significant move. Market to watch: GBP/USD

Federal Reserve minutes, 7pm: Janet Yellen has been tight-lipped on the subject of interest rate increases. The focus will be on the weight of opinion on the committee about when an increase would be appropriate. Market to watch: everything, but especially US indices, USD/JPY, EUR/USD, GBP/USD

Thursday

China HSBC manufacturing PMI (May), 2.45am: Global PMI Day kicks off with China. The previous month’s figure was 48.1, and we expect this to improve to 48.4, although this is still in contraction territory. Market to watch: copper, FTSE 100, AUD/USD

Eurozone PMI data (May), 8am-9am: This slew of indicators from the eurozone is broadly expected to be slightly weaker. Market to watch: EUR/USD, EUR/GBP, DAX

UK GDP (Q1, revision), 9.30am: No change is expected to the first revision, with quarter-on-quarter growth of 0.8% and year-on-year growth of 3.1% still forecast. Market to watch: GBP/USD, EUR/GBP

Weekly jobless claims, 1.30pm: These hit a seven-year low last week, down 24,000 to 297,000. The drop below 300,000 is particularly encouraging. Market to watch: USD/JPY, US indices

Markit manufacturing PMI (May), 2.45pm: A slight improvement is expected here, from 55.4 to 55.5. Market to watch: USD/JPY, US indices

Existing home sales (April), 3pm: The month-on-month rate is expected to increase rapidly to 2.2% from 0.2%, with 4.69 million being sold this month, up from 4.59 million last month. Market to watch: USD/JPY, GBP/USD, EUR/USD

Friday

German GDP (Q1 final), 7am: No revision is forecast for German economic growth, which should stay at 0.8% for the quarter-on-quarter figure and 2.3 for year-on-year. Market to watch: EUR/USD, DAX

German IFO (May), 9am: These sentiment surveys can be useful in determining the current state of the German economy. The ‘current assessment’ index is forecast to go up a notch, to 115.4 from 115.3. Market to watch: EUR/USD, DAX

US new home sales (April), 2pm: A bounce back in month-on-month growth to 10% from -14.5% is expected, with 423,000 sales in the month from 384,000 in March. Market to watch: EUR/USD, GBP/USD, USD/JPY, US indices

 

Company announcements

Monday

Babcock International, Shaftesbury

Tuesday

Vodafone, Marks and Spencer, BTG, Home Depot

Wednesday

Burberry, Great Portland Estates, Cable & Wireless, Target

Thursday

Mothercare, SABMiller, Halfords, Royal Mail, Gap, Hewlett-Packard

Friday

Sears

 

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