Global markets rebounded last week, posting a first weekly gain this month, writes Ian Slattery.
Economic data from the US was strong, with retail sales and industrial production posting increases, although housing data was mixed.
The Chinese Renminbi currency came under pressure, as real GDP growth slowed to 6.5% (YoY). Also, although the US refrained from labelling China a currency manipulator, it ratcheted up its criticism of recent Chinese actions, potentially opening up a new front in the trade dispute.
The EU and Italy remain at odds over Rome’s budget plans for 2019, with ECB President Mario Draghi issuing a warning regarding the ‘risks from countries challenging EU rules’. Moody’s also downgraded Italian debt to just one notch above ‘junk’ status. Brexit negotiations also continue to rumble on, with no resolution in sight.
The global index was up 0.5% (in euro terms) last week, led by Europe and the UK.
Oil moved lower, and closed at $69/barrel, despite increased tensions between Saudi Arabia and Western powers. Gold closed higher at $1226 per troy ounce, whilst copper finished the week at $6,228 per metric tonne.
The 10 year US bond yield finished at 3.19%, up from 3.16% a week earlier. The German equivalent closed lower at 0.46, as Italian worries continued.
THE WEEK AHEAD
Wednesday 24th October
Eurozone PMI data for the end of September goes to print, where the consensus expect a composite reading of 54.3.
Thursday 25th October
No change to monetary policy is forecast when the ECB governing council meets, however there may be some guidance for policy into next year at the accompanying press conference.
The minutes of the latest Fed FOMC meeting are released, which will be closely watched by the market for further indications of interest rate moves.
Friday 26th October
Preliminary US Q3 GDP growth figures are released where the consensus expects the annualised quarterly number to come in at 3.3%.