The week ahead

Normality returns to financial markets this week. As the initial full trading week of 2019 gets underway, investors are confronting a much more challenging situation and one with a plethora of corporate and economic data. US and Chinese consumer price indices (CPI), plus an Institute of Supply Management (ISM) non-manufacturing report from the US, are key data to watch for, while UK retailers and a host of diverse firms update the market on recent trading.

Global equities have started 2019 on the back foot, with investors unnerved at the combination of underwhelming manufacturing data in China and the US, and Apple’s shock revenue forecast cut. But on Friday stocks experienced a powerful leap, thanks to stronger than expected US jobs data.

Whilst Federal Reserve chair Jay Powell was also sounding more dovish. The non-farm payrolls data were a smash hit across the board.
The headline number of jobs created beat expectations as did wage growth and the participation rate. Which all helped alleviate some concerns that the US economic slow down could deepen into something worse.

The Fed Chairman Jay Powell then poured more fuel on the market rally by saying that the Fed would be “patient” in deciding on any more interest rate increases, and “wouldn’t hesitate” in halting its balance sheet shrinkage if it was unavoidable.

Apart from this, the week should also see the start of fresh debates on the UK’s withdrawal agreement with the EU. With a, postponed, vote expected during the middle of the month, but at present, the deal still looks unlikely to pass through parliament.