Sunday marked the start of the World Cup in Qatar. It seems that it could not have taken place without controversy over the preparations for the event. After yesterday's Thanksgiving holiday in the United States, today we may see increased shopping traffic in celebration of Black Friday. A weakening dollar and falling bond yields may have driven the broad market this week.
Macroeconomic data
On Wednesday, we learnt about the PMI reading on managerial sentiment in German industry. The reading of 46.7 points surpassed the expected 45 points and came as a positive surprise over the previous reading of 45.1 points. We could also see values for the same indicator from the UK, with a reading of 46.2 points (45.7 had been expected), against the previous reading of 46.2. From this we could see a warming of the market climate, which appears to have caused a 1% rise on the main German DAX index (DE40) since the start of the week.
Source: Conotoxia MT5, DE40, Weekly
On the same day, we learned about the number of building permits issued in the United States. Here, the data turned out to be more modest than expected, amounting to 1.512 million (1.526 million was expected). There was also news from the US economy on crude oil inventories, which fell by 3.69 million barrels (a drop of 1 million barrels was expected).
On Thursday, Americans celebrated the Thanksgiving holiday. In Europe, on the other hand, data from the Ifo index measuring expectations for the next six months among German entrepreneurs may have come as a positive surprise. The index came in at 86.3 points, while 85 points were expected, which, like the PMI index, may have comforted markets in their expectations for the future.
The stock market
Analysts may have been positively surprised by Q3 earnings this week. Among others, we saw better-than-expected earnings per share from technology, software and laboratory equipment maker Agilent Technologies (Agilient), whose EPS came in at 1.53 (expected 1.38). Zoom Video (Zoom), a popular company during the pandemic, also surprised positively, with EPS of 1.07 (expected 0.83).
On Tuesday, US semiconductor company Analog Devices (AnalogDev) showed EPS of 2.73 (2.58 expected), and the maker of software for industries including architecture, engineering and construction showed earnings per share in line with EPS guidance of 1.7.
Of the 11 sectors of the US economy, consumer goods sales grew strongest. The Consumer Staples Select Sector SPDR Fund (XLP) index has gained more than 3% since the start of the week, which may have been influenced by Friday's Black Friday.
Source: Conotoxia MT5, XLP, Weekly
Currency and cryptocurrency market
For another week in a row, we could see a weakening of the US dollar. The valuation of the EUR/USD pair has risen by 0.7% since the beginning of the week and currently stands at 1.04. The weakening of this largest reserve currency was also evident on the GBP/USD pair, which rose by 2% to around 1.21. The other currencies do not seem to show increased volatility.
Source: Conotoxia MT5, EURUSD, Weekly
There could still be a gloomy mood in the cryptocurrency market. Not even the reports that the largest exchange Binance has set up and contributed USD 1 billion to a fund to support crypto projects are helping. The price of bitcoin is hovering around US$16500 and ethereum around US$1190.
Source: Conotoxia MT5, BTCUSD, Daily
What could we expect next week?
Next week's key macroeconomic data will start with Tuesday's German CPI inflation reading. On the same day, we will learn the previously discussed Chinese manufacturing PMI. On Wednesday, the Eurozone CPI inflation readings appear to be particularly important. On this day, we will also learn the quarterly change in GDP for the United States. On Thursday, we will learn the PMI values for Germany, the United Kingdom and the United States. At the end of the week, we will find out the unemployment rate in the USA.
Tuesday will see Q3 financial results from business software developer Intuit (Intuit). Wednesday will bring a report from cloud software company Salesforce (Salesforce). We will end the week with a report from semiconductor company Marvell (MarvelTech).
Grzegorz Dróżdż, Junior Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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