Market Report – 28 November 2016
The Bank of England added a new, higher bar to its third round of public stress tests. The central bank will announce the outcome of its annual health check of the six biggest banks and one building society, Nationwide – on Wednesday.
GBP
Consumers and businesses increased their spending in the third quarter as the U.K. economy registered a resilient performance following the Brexit vote.
Household spending rose 0.7 percent and business investment increased 0.9 percent, the Office for National Statistics said. Growth overall was unrevised at 0.5 percent. A separate report from the Confederation of British Industry showed retail sales grew at their fastest annual pace in more than a year in November.
EU leaders are not “bluffing” when they say the UK will be left without access to the single market when it leaves the bloc if there is no free movement of people. Joseph Muscat of Malta, whose country assumes the EU’s presidency in January stated “This is really and truly our position and I do not see it changing”.
Campaigners are urging the government not to “cherry pick” different parts of the economy for special trade agreements with the EU after Brexit.
Three pro-EU MPs argue this approach risks creating “losers” because almost all sectors are linked to the EU. Any attempt to choose “winners” for free trade deals with the EU “cannot be achieved without the risk of creating ‘losers’ through reduced access and reduced future mutual benefits”, it adds.
‘’There are no inevitable outcomes. There is no mandate for one particular Brexit option. The only question on the ballot paper was whether to leave, which we will, but how we execute our extraction must be debated’’ said MP Ms. Soubry.
(photo credit:BBC)
Tuesday: Mortgage Approvals (Oct)
Wednesday: Consumer Confidence (Nov) and Financial Stability Report
Thursday: Markit Manufacturing PMI
Friday: PMI Construction (Nov)
EUR
Europe’s top monetary policy makers issued a stark alert ahead of Italy’s constitutional referendum on December 4th. It’s feared Brexit and the US election of Donald Trump will fuel anti-Brussels sentiment in the Eurozone.
If Italian leader Matteo Renzi loses the vote, it’s thought the anti-euro 5-Star Movement could take over as ruling party and refuse to pay back the country’s debts.
The ECB also warned about political risks to the economy rising from French and German elections next year.
The Euro managed to bounce back from year lows against the Dollar last week, regaining 1.5%.
Today: Speech from President Draghi of the ECB
Tuesday: GDP figures France
Wednesday: CPI Core (YoY) for Eurozone
Thursday: Unemployment Rate for Eurozone (Oct)
Friday: Producer Price Index for Eurozone
USD
The Donald Trump effect is losing its sway over global financial markets. Trades that performed best in the three weeks since Trump’s shock election victory took a breather, with the Dollar falling the most since September and S&P 500 Index futures signalling US stocks will slip from all-time highs, according to Bloomberg.
Investors globally are reassessing their bets before top tier data releases this week, with Trump’s pledges to boost infrastructure spending not enough to continue the Dollars recent rally.
Crude extended losses amid anxiety prospects are fading for an OPEC production freeze agreement at the group’s formal meeting Wednesday
Tuesday: GDP figures Annualised (Q3)
Wednesday: Personal Consumption Expenditures, Pending Home Sales and Fed’s Beige Book
Thursday: ISM Manufacturing PMI and Prices Paid
Friday: Non-Farm Payrolls
Rest of the World
The Australian dollar has been pushing higher in early trade this morning in Asia, benefiting from higher bulk commodity prices, particularly iron ore which is the nation’s largest export item, along with a pause in the US dollar rally.
The Chinese government is making strategic moves to construct an Asia-based economic bloc based on the Chinese Yuan, with ambitions of turning it into a currency capable of replacing the US Dollar in the world economy.