The week ahead: hoping for a good start

After some time off, investors are back on the market in the new year. A year, we all hope, will be better than the last one. In terms of the economic condition of global economies, this hope is relevant but as to stock markets – it will be difficult to repeat last year’s increases.

After some time off, investors are back on the market in the new year. A year, we all hope, will be better than the last one. In terms of the economic condition of global economies, this hope is relevant but as to stock markets – it will be difficult to repeat last year’s increases. During the last quarter, the mixed macro news did not provide a clear signal to where the market is going. Better than expected publications were “ambushed” by really disappointing news. How does the upcoming week look like? For sure it will be interesting. Investors are back in the game after the holiday break and at the same time important reports will be published.

On Monday, before noon, a series of PMI reports for the Polish, French, German and Eurozone’s economies will be published but those should not cause much movement. Higher volatility is expected after the ISM Manufacturing Index publication from the U.S. Since September of last year, the index is above 50 points, meaning expansion of the U.S manufacturing sector and such trend is expected. On Tuesday, investors should pay attention to the U.S Pending Home Sales report as well as to the final Durable Goods Orders. More important news are expected on Wednesday. The market will probably ignore the PMI reports from the EU economies but it will certainly react to the ADP Non-farm Employment Change publication (it will be the first U.S labor market report this week) and the ISM Services report. The ISM index is a good “representative” of the U.S economy and is of great importance to economists. Recently, it dropped back below the 50 points level (meaning recession) but now it is forecasted to be above the crucial level. Later on that day, the FOMC minutes will be released but after last time’s Fed interest rate decision (and the press conference afterwards), no big surprises are expected. Thursday will be the day, on which the British MPC will announce its interest rate decision but no change from the current 0.5% level is expected. Later on the second report from the U.S labor market report, the unemployment claims, will be released.

Friday is the day investors all around the world are waiting on. The U.S monthly labor market report will be published. Last month, the nonfarm payrolls report shocked the investment world as it was much better than expected. Some investors wait to see if the previous release will be corrected. If the report turns out to be as forecasted, it can be a sign that the labor market is slowly bouncing back (although the unemployment rate is expected to increase to 10.1%).

The upcoming week will certainly not answer all questions but it can give an impulse to financial markets for the next couple of weeks.

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