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- Italy, Fed and the corporate earnings will drive the markets during the next week
Italy, Fed and the corporate earnings will drive the markets during the next week
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Loading...The upcoming week will go under the pressure from the stock market selloffs, falling indices in China, fears of investors from rapidly rising interest rates, speculation about the trade war as well as EU-UK and EU-Italy relations.
The Italian budget plan is rapidly becoming a major concern for global markets, as investors are seeing the rising probability of confrontation between the EU and the Roman populist government. The fears of confrontation between the Italian government and the European Commission have intensified over the past week, as Rome urges to stick to its ambitions for widespread spending - despite the unprecedented EU disagreement. Following receipt of the last letter from the Commission, the Italian government must reply formally by Monday, with the answer being also on the weekend. If, after receiving the Italian reaction next week, the Commission still believes that the budget is in serious mismatch, the institution based in Brussels has two weeks to decide what to do next. Meanwhile, global credit rating agencies, including S & P and Moody's, will have to conduct a full review of Italy's rating by the end of October. A decrease in the credit rating will place the third largest economy in the euro area near junk, which will result in the loss of hundreds of billions of funds that receive an investment grade rating.
High bond yields and the Fed's strong stance, coupled with geopolitical tensions, will continue to put pressure on stock indices. Despite the sharp decline in indices, traders remain calm and for this reason, after initial uncertainty, next week will allow for Long positioning with the main trend. Core indices hold at key technical levels around 200 of its periodicals, and this with a temporary calming of lusts over the weekend will accumulate new purchases during the first hours of trading on Monday.
In addition to the technical picture that inspires optimism for investors, another contributing factor is the reporting season, which is running in full swing. Leaders' good financial performance will further strengthen investor confidence.
With regard to the economic calendar, the new week will begin relatively calmly. On Wednesday, we expect the Bank of Canada's decision on the interest rate, with traders raising 25bp. The central bank press conference, later in the day, will give an indication of the bankers' plans for the future of monetary policy. On Thursday, their colleagues from the European Central Bank will decide on interest rates in the bloc. Expectations are to maintain current interest rates, but the key question is when exactly the central bank will start its way to normalize politics and exit from post-crisis quantitative easing. On Friday, traders will be interested in tracking data on GDP in SAS, with speculation that the trade war is negatively affecting the economy. Expectations are for omission and lower values, which may confuse the Fed's plans for further tightening of the country's policy.
The important economic news to watch out for next week
Monday:
04:00 Australia - RBA Assist Gov Debelle Speaks
15:30 Canada - Wholesale Sales
Tuesday:
13:00 UK - CBI Industrial Trend Orders
23:30 USA - API Weekly Crude Oil Stock
Wednesday:
10:30 Germany - Manufacturing PMI
11:00 Europe - Markit Composite PMI
17:00 USA - New Home Sales
17:00 Canada - BoC Interest Rate Decision
17:30 USA - Crude Oil Inventories
18:15 Canada - BoC Press Conference
Thursday:
00:45 New Zealand - Trade Balance
09:00 Germany - Gfk Consumer Climate
11:00 Germany - Ifo Business Climate
14:45 Europe - ECB Interest Rate Decision
15:30 USA - Durable Goods Orders
15:30 USA - Initial Jobless Claims
17:00 USA - Pending Home Sales
Friday:
15:30 USA - Gross Domestic Product
Trader Aleksandar Kumanov Read more:
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