By Adil Yousuf
Both the Dow and S&P 500 closed at new highs last week after April's better-than-expected employment report — the four-week average of claims is now at the lowest level since November 2007. The Dow rose into record territory, finishing at 15,118.49, up almost 1% for the week. The S&P 500 ended at 1,633.70.
A weakening yen, which hit a multi year low versus the dollar, lifted Japan's economic outlook, sapping demand for assets perceived to be safe, such as Treasury bonds. While stocks rose globally, major commodities including oil, natural gas, gold and silver declined.
The week ahead is rich in economic events that will indicate whether the market would be able to maintain its upbeat momentum or if there are speed bumps ahead.
Following is an economic overview for the week May 13 - May 17, 2013.
(All times EST)
Monday, May 13
The spectre of Cyprus will loom over Brussels, as European finance ministers confront the raw question of whether big depositors should routinely suffer losses to rescue distressed banks. They may also discuss future steps needed to strengthen the EU banking system.
08:30 — U.S. Retail Sales Report
The report will present the monthly changes in the retail sales and food services for April. In March, retail sales and gasoline station sales fell by 0.4% and 2.2% respectively when compared to February 2013. This report could signal changes in gasoline demand and thus may affect oil prices in the U.S.
Wednesday, May 15
04:30 — Great Britain Claimant Count Change:
The report will shows the changes in the number of unemployed in Britain.
Bank of England Inflation Report (tentative):
The report will show the yearly rate of Britain's inflation based on the estimate of Bank of England for the next two years.
05:00 — EU First Quarter GDP 2013: :
During the fourth quarter of 2012, EUâ€™s economy contracted by 0.6%. If the EU economy continues to shrink, this could adversely affect the Euro.
05:30 — Governor King speaks:
Sir Mervyn King, Governor of the Bank of England, will deliver the Inflation report. The Bank is expected to revise up its growth forecasts and revise down its inflation outlook in the light of the recent better economic news flow, and oil and food prices.
08:30 — Canada Manufacturing Sales:
This report will refer to the manufacturing sales in Canada as of March. It may affect the USD/CAD currencies pair, which is strongly correlated with commodities prices. In the latest report for February 2013, manufacturing sales sharply increased by 2.6%.
08:30 — U.S. Producer Price Index (PPI):
The report will show developments in the PPI during April 2013. In the previous report for March, the index for finished goods declined by 0.6% compared with Februaryâ€™s rate and by 1.1% in the past 12 months. The report might affect the direction of commodities rates.
10:30 — U.S. Crude Oil Inventories:
The EIA (Energy Information Administration) will publish its weekly report on the U.S. crude oil inventories for the week ending on May 10. In the recent report for May 3, inventories increased by 3.5 million barrels to reach 1,795.6 million barrels.
Thursday, May 16
08:30 — U.S. Housing Starts:
The U.S. Census Bureau will come out with its U.S. housing starts monthly report for April 2013. This report has been historically correlated with gold prices — as housing starts increase, gold prices tend to fall the next day.
08:30 — U.S. Building Permits:
Building permits fell during March by 3.9%. If building permits show signs of weakness, it may indicate that the U.S. housing market isn't recovering.
08:30 — U.S. Core Consumer Price Index (CPI):
The report will refer to the main changes in CPI for April 2013. Based on the U.S. Bureau of Labour statistics, during March, the CPI slipped by 0.2%; the core CPI edged up by 0.1%; and the core index rose over the past twelve months by 1.5%.
08:30 — U.S. Unemployment Claims:
The weekly update will pertain to the shifts in the initial jobless claims for the week ending on May 4. Unemployment is expected to be unchanged at 7.9%. This upcoming weekly report may affect the path of U.S. dollar, and consequently commodities and stocks markets.
10:00 — Philly Fed Manufacturing Index::
This monthly survey shows an estimate for the growth of the US manufacturing sectors. Last month, the growth rate fell from 2.0 in March to 1.3 in April. If the index increases, it may positively affect U.S. Dollar, and the stocks and commodities market.
Friday, May 17
08:00 — Canada's core CPI:
This report will refer to the CPI and core consumer price index (controlling the volatile components such as energy, fruit and vegetables) for April 2013. Based on the previous Canadian CPI report for March 2013, the core CPI slightly increased by 0.2% during the month. The report might affect the Canadian dollar, which is also strongly correlated with commodities rates.
09:55 — University of Michigan Consumer Sentiment (preliminary):
University of Michigan will publish its preliminary consumer sentiment monthly report. The survey could offer insight into latest developments in U.S. consumers' sentiment. According to the previous update, the sentiment index changed direction and slightly rose to 72.3.
For more insights, visit the Market IQ blog.
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.