Asian markets suffered a choppy week, bouncing back and forth with no clear direction as investors tried to sort out both the political and trade messages coming from the U.S. At the end of the week the Hang Seng had the best weekly performance, rising 1.6% on the back of a very strong Monday session. South Korea’s Kospi was the next best performer, adding 1.4% as it rose for four out of the five sessions during the week. In Japan the Nikkei managed a 1% weekly gain, with the bulk coming at the start of the trading week. Mainland China’s Shanghai Composite finished the week with a 1.1% loss, and in Australia the S&P/ASX 200 was 0.2% lower on a weekly basis after suffering a three-session losing streak mid-week.
The coming week could see much of the same for Asian markets, as potential U.S. tariffs are still on the table, and the White House continues shuffling key staff members, leading to uncertainty over U.S. policies. Technology has continued to outperform throughout the latest market gyrations, so South Korea could continue to do well. Weakness in Chinese markets came last week in response to rising inflation there, but that should be done with in the coming week. This should allow both the Shanghai Composite and Hang Seng to make good gains. The Nikkei will continue to move based on Yen movements, and we should have a stronger Yen on safe-haven buying, but the Wednesday U.S. Fed meeting could have an impact.
European markets had a choppy week, too, with losses coming early in the week, but a recovery beginning as the week came to a close. Investors remained worried over U.S. tariffs and unexpected changes at the White House throughout the week, and this weighed on potential gains. Overall the sessions balanced out for the Stoxx Europe 600, the broadest measure of European equities, as it ended the week unchanged. Germany’s DAX outperformed as it tacked on 0.4% for the week, while the CAC 40 in France added a modest 0.2%. London’s FTSE finished the week down by 0.8% as losses from the basic materials sector was a drag on the broader market.
The coming week should begin quietly, as there is little economic data out on Monday. The most activity this week could come from London, where investors will be confronted with a host of key data points, culminating with Thursday’s Bank of England monetary policy decision. Tuesday has U.K. inflation data on tap, and Wednesday will see employment and wage data reported. Volatility for the Pound and for the FTSE is a strong possibility on both days. Then comes Thursday’s BoE monetary policy decision, where no changes are expected, which means the BoE could surprise markets, although that isn’t likely.
U.S. markets gave the worst performance for global equities in the past week, with all three of the major benchmark indices finishing solidly in the red. Losses came on most days, although the markets managed to perk up in the final trading session of the week. On a weekly basis the Dow Industrials were 1.6% lower, despite gaining in the final two sessions of the week. The S&P 500 fared a bit better with a 1.3% weekly loss after falling for four sessions in a row, its longest such losing streak of the year. The best performance was from the Nasdaq, where strength from large cap technology names helped, but not enough to keep the index from a 1% weekly drop.
The coming week could start out at least with some caution, if not with outright selling again as investor thoughts will be looking ahead to Wednesday’s release of the latest Federal Reserve monetary policy statement. Expectations are for a 0.25% rate hike from the Fed, but what investors will be more interested in is the actual policy statement, as they’ll be looking for clues to how many rate hikes to expect in 2018. Hawkishness from the Fed at this juncture could send markets sharply lower, and even dovishness might help markets, much as it wouldn’t be a change of expectations.
Gold fell in four out of five sessions this past week, ending with a 0.9% weekly drop as the U.S. dollar has been firming against rival currencies, putting pressure on gold. The drop left gold at a two-week low, and was the worst weekly performance for the yellow metal in a month. With the U.S. dollar continuing to strengthen, gold could have another bad week coming, especially if we get hawkish signals out of the Fed monetary policy meeting.
Crude began the week falling on worries over rising U.S. production, but a strong showing on Friday thanks to increased global demand forecasts left crude 0.5% higher for the week. The coming week is likely to see crude continue bouncing back and forth as traders have not yet decided whether they favor the bullish growing demand story or the rising U.S. production bearish scenario.
|00:50||JPY||BOJ Summary of Opinions|
|Day 1||ALL||G20 Meetings|
|12:00||EUR||German Buba Monthly Report|
|01:30||AUD||Monetary Policy Meeting Minutes|
|05:15||AUD||RBA Assist Gov Bullock Speaks|
|10:30||GBP||PPI Input m/m|
|11:00||EUR||German ZEW Economic Sentiment|
|Day 2||ALL||G20 Meetings|
|All Day||JPY||Bank Holiday|
|10:30||GBP||Average Earnings Index 3m/y|
|10:30||GBP||Claimant Count Change|
|10:30||GBP||Public Sector Net Borrowing|
|15:00||USD||Existing Home Sales|
|15:30||USD||Crude Oil Inventories|
|19:00||USD||FOMC Economic Projections|
|19:00||USD||Federal Funds Rate|
|19:30||USD||FOMC Press Conference|
|09:00||EUR||French Flash Manufacturing PMI|
|09:00||EUR||French Flash Services PMI|
|09:30||EUR||German Flash Manufacturing PMI|
|09:30||EUR||German Flash Services PMI|
|10:00||EUR||Flash Manufacturing PMI|
|10:00||EUR||Flash Services PMI|
|10:00||EUR||German Ifo Business Climate|
|10:30||GBP||Retail Sales m/m|
|13:00||GBP||MPC Official Bank Rate Votes|
|13:00||GBP||Monetary Policy Summary|
|13:00||GBP||Official Bank Rate|
|13:00||GBP||Asset Purchase Facility|
|13:00||GBP||MPC Asset Purchase Facility Votes|
|13:30||CAD||Core Retail Sales m/m|
|13:30||CAD||Common CPI y/y|
|13:30||CAD||Median CPI y/y|
|13:30||CAD||Retail Sales m/m|
|13:30||CAD||Trimmed CPI y/y|
|13:30||USD||Core Durable Goods Orders m/m|
|13:30||USD||Durable Goods Orders m/m|
|15:00||USD||New Home Sales|