Global stock markets endured losses last week amid concern central banks are losing an appetite for more stimulus.
US Investors digested a handful of mixed economic reports and remained on edge as concerns remained over whether Federal Reserve will pare back its bond purchases.
US Stocks ended negative last week — DOW fell 1.2%, S&P 500 slid 1% and NASDAQ lost 1.3%.
This upcoming week Investors will closely watch the Federal Reserve's policy-setting meeting. The FOMC meeting will include not only the regular announcement pertaining to monetary policy, but also revised economic forecasts and a press conference by Chairman Bernanke. Investors will be watching for any hints of a change in policy.
- Will the Fed reduce the pace of current Quantitative Easing? Probably not.
- If not, will it provide more information about the timing of a possible change?
- What might be the size of bond purchase reduction?
Following are Sentiment charts for S&P 500 (NYSE:SPY), DOW Jones, and NASDAQ (NASDAQ:QQQ).
Following is an economic overview for the week June 17 - June 21, 2013.
(All times EST)
Monday, June 17
Talks at the G8 Summit could revolve around economic policies of US, UK and Japan. Any big headline from this Summit may affect financial markets.
Tuesday, June 18
04:30 — Great Britain CPI (May 2013):
In April, Consumer Price Index declined to an annual rate of 2.4%. A further decline may adversely impact the British Pound, driving expectations of an expanded Bank of England stimulus effort on the horizon.
Bank of England Inflation Report (tentative):
This report will present yearly rate of Britain's inflation based on Bank of England's estimate for the next two years.
08:30 — US Housing Starts:
US Census Bureau will publish its US housing starts monthly report for May 2013.
08:30 — US Building Permits:
Building permits increased during April by 14.3% (month over month). If building permits continue to rise, it may indicate that the US housing market is recovering.
08:30 — US Core CPI:
Monthly update will refer to main developments in the core consumer price index for May 2013. During April, CPI declined by 0.4% (month over month) and the core CPI inched up by 0.1%.
Wednesday, June 19
04:30 — MPC Meeting minutes:
In the last Monetary Policy meeting, Bank of England voted to maintain the official Bank Rate paid on commercial bank reserve at 0.5% and the asset purchase program at £375 billion. The minutes of last week's meeting might offer some perspective regarding the bank's future monetary policy.
12:40 — BOC Governor Poloz speaks:
Bank of Canada's new Governor will hold a press conference about the Bank's inflation report. He may also offer to talk about the upcoming MPC monetary policy meeting, which may affect British Pound.
14:00 — FOMC Statement, Economic Projections and Press Conference:
FOMC will convene for the fourth time this year and announce of any changes to its monetary policy. In the previous meeting, FOMC left its policy unchanged. Moreover, Bernanke’s testimony didn’t offer any insights to future policy. However, he did suggest that tapering of current asset purchases could take place in the near future.
Considering that the US Economy is still experiencing low inflation, high unemployment, and less than robust economy, it is highly unlikely that the Fed will change its policy. The Fed’s forecast, however, could change, which, in turn, could influence the markets.
21:45 — HSBC Flash Manufacturing PMI:
In May the Manufacturing PMI slipped to 49.6, which suggested contraction in China's manufacturing sector. A further fall in the index may adversely affect commodities.
Thursday, June 20
04:30 — GB Retails Sales (May 2013):
This report will present changes in retails sales for May 2013, which may affect the path of the British Pound. In April, retails sales declined by 1.3%.
08:30 — US Unemployment Claims:
Weekly report will refer to changes in initial jobless claims for the week ending on June 15. In the previous report jobless claims declined by 12K to reach 334K. This weekly report may affect the US dollar and consequently commodities and equities markets.
10:00 — US Existing Home Sales:
This report will refer to shifts in US existing home sales for May 2013. In April, home sales increased to a seasonally adjusted annual rate of 4.97 million houses. If this trend persists, it might pressure up the US dollar.
10:00 — Philly Fed Manufacturing Index:
This monthly survey estimates growth in the US manufacturing sector. Last month, growth rate slipped from 1.3 in April to negative 5.2 in May. If the index increases it may positively affect the US Dollar, and US equity markets and commodities.
10:30 — EIA US Natural Gas Storage:
EIA weekly report will refer to changes in natural gas production, storage, consumption, and prices as of June 14. Last week, natural gas storage rose by 95 billion cubic feet to 2,347 billion cubic feet.
Friday, June 21
02:35 — Bank of Japan Governor Kuroda Speaks:
Considering the high volatility in Japan's currency and drop in equity markets recently, his words could influence investors.
08:30 — Canada core CPI:
This report will pertain to the CPI and core consumer price index (controlling volatile components such as energy, fruit and vegetables) for May 2013. In April, the core CPI inched up by 0.1%. This report might affect the Canadian dollar, which is also strongly linked with gold and silver prices.
08:30 — Canada Retail Sales:
This report will refer to retails sales as of April. In March 2013, retails sales slipped by 0.2%.
This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.