If stock-selling seen on Monday is any indication, the weak Eurozone is causing real concern.
The weekend’s high-level meetings among Treasury and Finance ministries showed us Europe is a major issue. This week, there are fresh PMIs coming out to calibrate that weakness.
On Monday, European Central Bank President Mario Draghi — during an appearance before the European Parliament in Brussels — said the economic recovery in the euro area is faltering, and that a strong exchange rate is not a priority for the ECB.
On Tuesday, expect purchasing managers surveys (PMIs) to show Eurozone manufacturing and service sectors barely grew — and that growth slowed from the sluggish pace seen earlier this year.
GDP for France comes out on Tuesday. Consensus looks for a pathetic 0.0% GDP growth. This data is likely to be coupled to Germany's Ifo business conditions survey out on Wednesday. The Ifo index could show a fifth successive monthly drop.
On Tuesday, the HSBC/Markit flash PMI for China comes out. With two Chinese monetary stimulus measures announced last week, this number may be a downer too.
On Thursday, the ECB could reveal one reason for Eurozone weakness. Banking statistics are likely to show another drop in bank lending, with no sign of any pick-up soon. Data could also show long-term deposits with banks falling while overnight ones are rising. That’s consistent with depositors having a lack of confidence in banks.
For the U.K., watch two releases. The Scottish election is in the rear view mirror. First off, a fresh U.K. retail report from the CBI should show strong September retail sales growth. Continued U.K. job growth appears to be offsetting falling real wages. Second, U.K. government borrowing might cause a little concern. Government figures could show public sector net borrowing so far this year of around £40 billion, compared with £35.5 billion in the same period last year.
European bond yields are near record lows. It is unlikely the U.K. bond market will worry about any rise in U.K. borrowing, given the staggering problems faced by Europe.
The trading week concludes with the final estimate for U.S. GDP in Q2. Consensus expects the +4.2% report for Q2 to be raised to +4.6%.
Can the strong U.S. keep the weak Eurozone out of the hot water? That is the big question markets will spend the trading week debating.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment