US markets ended a holiday-shortened week at new highs with DOW Jones and S&P 500 (NYSE:SPY) closing above the psychological barrier of 16,000 and 18,000 respectively. November marked the third consecutive month of gains for DOW Jones, S&P 500 (NYSE:SPY), and NASDAQ (NASDAQ:QQQ).
For the upcoming week, investors will be focused on sales data from retailers as they take the center stage after the Thanksgiving weekend. Additionally, employment numbers are likely to dominate the next move for the markets as investors will look for fresh clues as to when the Fed will begin the tapering process.
The Fed has repeatedly said its stimulus program will be influenced by economic growth and unemployment rate in the economy, leading investors to treat soft data as a bullish market catalyst that guarantees Fed stimulus.
Following are Sentiment charts for S&P 500 (NYSE:SPY), DOW Jones, and NASDAQ (NASDAQ:QQQ).
Following is an economic overview for the week December 2 - December 6, 2013.
(All times EST)
Monday, December 2
10:00 — ISM Manufacturing PMI:
US ISM Manufacturing PMI rose to 57.3 in November (a reading above 50 indicates expansion), its best reading since April 2011. November was the sixth consecutive month of growth since a contraction in May, with growth accelerating after the partial US government shutdown that limited activity in October.
Wednesday, December 4
04:30 — UK services PMI:
Services PMI is a leading indicator of economic health — businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy. The index rose to 62.5 in October, vs. September's 60.3, the biggest increase in activity since May 2007. For the upcoming report, economists are expecting a reading of 62.1, an indication that the services sector is expected to continue showing strong growth.
08:15 — ADP Non-Farm Employment Change:
ADP will release its estimate for the US non-farm payroll changes for November 2013. In October 2013, private sector employment increased by 130K jobs when compared to September 2013.
08:30 — Canada Trade Balance:
In September 2013, exports increased by 1.8% while imports increased by 0.2%. As a result, trade deficit narrowed from $1.1 billion in August to $435 million in September. For the upcoming report economists are expecting deficit to widen to $700 million. Any surprises from the report may affect the Canadian dollar, which tends to be correlated with commodities prices.
08:30 — US Trade Balance:
Monthly update will show the US trade balance for the month of October 2013. In September, trade deficit expanded to $41.8 billion vs, expectations of $38.7 billion — its highest level since July. For the upcoming report, economists are expecting US trade deficit to decline from October and show a reading of $40.3 billion.
10:00 — Bank of Canada Rate Statement:
Bank of Canada will announce changes if any to its overnight rate decision — the rate is currently at 1%. Based on current expectations, the Bank of Canada is expected to keep the rate unchanged.
10:00 — ISM Non-Manufacturing PMI:
In October, this index increased to 55.4% above expectations of 54.2, indicating faster expansion in the non-manufacturing sector. For the upcoming November report, economists are expecting the non-manufacturing PMI to remain unchanged from October. Any surprises in the reading may impact the US dollar.
10:00 — US New Home Sales:
New home sales is a leading indicator of economic health because sale of new homes triggers a wide-reaching ripple effect. For example, furniture and appliances are purchased for the home, a mortgage is sold by the financing bank, and brokers are paid to execute the transaction. In October, sales of new homes increased to an annual rate of 421K — a 6.8% rise (month-over-month). For NOvember, economists are looking for a reading of 432K, a further increase than October, indicating growth in the US housing market.
10:30 — Crude Oil Inventories:
EIA (Energy Information Administration) will publish its weekly report on US oil and petroleum inventories for the week ending on November 29, 2013.
Thursday, December 5
07:00 — BOE Asset Purchase Facility and Official Bank Rate:
Bank of England will release its basic rate for December 2013. The Monetary Policy Committee will also state of any new developments to its asset purchase pogrom. As of November, BOE kept its interest rates at 0.5% and the asset purchase plan at 375 billion.
07:45 — ECB Minimum Bid Rate:
ECB will announce its monetary policy and economic outlook as of December. The current expectations are that ECB will keep its cash rate unchanged especially since ECB cut its rate last month to 0.25%.
08:30 — US Preliminary GDP (q/q):
This will be the second estimate of US Q3 2013 real GDP growth. In the early estimate, Us GDP grew by 2.8% in Q3 2013. If the growth rate in the second estimate falls from the first estimate, this could negatively impact not only the US dollar but also commodities prices.
08:30 — US Unemployment Claims
Weekly update will refer to shifts in the initial jobless claims for the week ending November 20, 2013. In the previous report, jobless claims declined by 10K to reach 316K. The upcoming weekly report may affect the US dollar and consequently commodities prices and equities markets.
10:00 — US Factory Orders (m/m)
The upcoming report will refer to changes in US factory orders of manufactured durable goods during November. In the previous report factory orders increased by 1.7%. This upcoming report will offer more insights on developments in the US economy.
10:00 — Canada Ivey PMI
Ivey PMI for October 2013 stood at 62.8. The corresponding figure for October 2012 was 58.3 and for October 2011 was 54.4. For the upcoming report, expectations call in for a small decline from the October 2013 figure to show a reading of 60.2.
Friday, December 6
08:30 — Canada Unemployment:
In October 2013, unemployment remained unchanged at 6.9% while employment grew by 13.2K. For the upcoming report, economists are expecting unemployment rate to increase to 7% and employment to shown an increase of 7.6K.
08:30 — US Non-Farm Employment Change and Unemployment Rate:
In October 2013, non-farm payroll employment increased by 204K vs. expectations of 121K while unemployment rate edged up to 7.3%. For the forthcoming report, economists are expecting non-farm employment to increase by 184K. If employment exceeds 150K (in additional jobs), this may positively impact equity markets and the US dollar, thereby adding further pressure on precious metals.
08:30 — US Personal Spending (m/m):
Monthly report will pertain to changes in income and outlays during October. In September personal income increased by 0.2% vs, expectations of 0.3%.
09:55 — Preliminary University of Michigan Consumer Sentiment:
University of Michigan will release its preliminary consumer sentiment monthly report. This survey could offer insights regarding the latest changes in US consumers sentiment. According to October report, sentiment index fell sharply to 72 vs. expectations of 74.6. For the upcoming report, expectations call in for an increase in sentiment and a reading of 76.2.
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.