Better than expected GDP growth and strong employment report weighed on US stock indexes this week. Investor concerns about a December taper were easily visible as the markets sold off on Thursday despite a strong GDP report.
Elsewhere, the tech sector grabbed a lot of attention this week. Shares of BlackBerry BBRY plunged more than 16% on news the beleaguered smartphone maker has abandoned a plan to sell itself. BlackBerry BBRY said it would replace Chief Executive Thorsten Heins and receive a $1 billion investment from institutional investors (see: Market IQ report on BlackBerry ). Separately, enthusiasm for Twitter (TWTR) defied traditional valuation analyses and reminded investors of the dot-com bubble days, as the microblogging company soared more than 70% in its trading debut.
On the European front, a surprise interest rate cut by the European Central Bank raised concerns over the bloc's economy. European equity markets, government bond yields, and the Euro fell as a reaction to the bank's dovish policy.
Following is an economic review for the week November 04 - November 08, 2013.
Monday, November 04
UK Construction PMI:
UK Construction PMI came in at 59.4 for October 2013, up from 58.9 in September and above the 50 mark separating growth from contraction for the sixth consecutive month. It was the highest reading since September 2007 and well ahead of the forecast of 58.9. Homebuilding was the biggest driver of growth as property market continued to pick up while civil engineering and commercial projects also enjoyed a boost in October.
US Factory Orders (m/m):
US factory orders jumped 1.7% in September, slightly shy of expectations for a 1.9% increase. The September gain was driven by a big jump in demand for aircraft. But businesses cut back sharply on machinery and other goods, signaling signs of slower economic growth.
Tuesday, November 05
ISM Non-Manufacturing PMI:
ISM Non-manufacturing PMI surprised to the upside rising to 55.4 in October, from 54.4 recorded in September. The report suggested better job growth in the non-manufacturing sector, comprised mainly of service providers. The employment index also increased to 56.2 in October after it fell to 52.7 in September from 57 in August.
Wednesday, November 06
UK Manufacturing Production (m/m):
Manufacturing production grew 1.2% in September, reversing August's 1.2% fall, after an increase in UK car production helped the sector to post stronger than expected growth.
Canada Building Permits:
Canadian building permits increased by 1.7% in September, helped by increased plans for housing construction, after permits plunged 20% in August due to weaker construction intentions in both the non-residential and residential sectors.
US Crude Oil Inventories:
US crude oil inventories increased by 1.6 million barrels to 385.40 million barrels for the week ended November 1,2013, below expectations for an increase of 1.9 million barrels.
The Ivey PMI came in at 62.8 in October, surpassing expectations for 52, and following a September reading of 51.9. The Ivey PMI reached its highest level since May, when it stood at 70.8.
Thursday, November 07
UK Official Bank Rate:
Bank of England left interest rates unchanged at 0.5% and made no change to its quantitative easing.
Euro Zone Interest Rate:
ECB's decision to cut its main rate to 0.25% from 0.5%, took many analysts by surprise. The decision came in as a reaction to a sudden drop in Euro Zone inflation, which fell to an annual rate of 0.7% in October, well below the bank's official target of 2%.The decline raised the specter of deflation, a sustained fall in prices that can destroy company profits, and high unemployment in the economy.
US Unemployment Claims:
Unemployment claims fell 9K to a seasonally adjusted 336K vs. expectations of a decline to 335K for the week ended November 1, 2013.
US GDP Growth:
US GDP grew at a 2.8% annualized rate in the quarter that ended Sept 30. That marked an improvement from Q2's 2.5% rate of expansion, and was the highest in a year.
China Trade Balance:
Chinese trade balance recorded more-than-estimated surplus during October ($31.1 billion vs. expectations of $24.8 billion), adding to signs that the world's second largest economy was on track to achieve the government's target growth rate of 7.5%.
Friday, November 08
Canada Unemployment Rate:
Canadian economy added 13,200 jobs in October to keep unemployment rate unchanged at 6.9% from the prior month, the lowest level since the financial crises in 2008-2009.
US Non-Farm Employment:
The delayed October employment report, which was originally scheduled for Nov 1, was surprisingly upbeat, raising the prospect for December tapering by the Federal Reserve. Employers added 204K jobs in October, widely surpassing estimates of an increase of 120K new jobs and the 148K jobs created in September.
Preliminary University of Michigan Consumer Sentiment:
University of Michigan's preliminary reading on consumer sentiment fell to 72 in November, its lowest since December 2011. That was lower than October's final reading of 73.2 and the 74.5 economists had expected.
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.