Investors are in for a busy week as November comes to an end, with the growing coronavirus infections in Europe, US and Japan still in focus.
This month saw global stock markets experience extreme volatility due to second lockdowns, the US election and COVID-19 vaccine news.
The final week of the month is sure to add more pressure with plenty of economic data on the slate, the ongoing US election drama and Brexit as we near December.
It is a curtailed week for Wall Street as America celebrates Thanksgiving on Thursday — with bond and equity markets closed.
The end of the week will see Black Friday, with sales figures being closely watched to track any hint of resilience in consumer spending despite COVID-19.
Investors will keep a keen eye on the G20 summit over the weekend, with many leaders due to hold speeches including Hong Kong chief executive Carrie Lam following more demonstrations in recent days.
Key developments over the weekend that will influence markets:
UK: Spending review, manufacturing and services PMIs and of course Brexit
A big data-filled week kicks off in Britain with economic releases from the biggest sector, services and manufacturing out on Monday.
Services PMI could be in danger of falling back into contraction territory after the end of the Eat Out to Help Out scheme and following tighter coronavirus restrictions, while the manufacturing sector has a bit more of a buffer.
The scheme and lifting of lockdown in the Summer boosted the UK economy giving it much more resilience. Last week, the Office for National Statistics (ONS) figures showed that the economy grew by 15.5% between July and September after a record contraction in Q2.
In September, services activity slowed modestly to 56.1, while manufacturing came in at 54.1, showing that the UK economy performed extremely well in the third quarter. October saw services and manufacturing numbers slow down to to 53.7 and 51.4 respectively, as localised restrictions impaired economic activity.
November figures are expected show a further drop, with services taking the brunt of the hit, especially after the second England lockdown came into force on 5 November.
Experts at Deutsche Bank expect manufacturing activity to be buoyed by Brexit stockpiling as firms rebuild their stocks ahead of the Brexit deadline. “We expect this to keep manufacturing activity in growth territory at 51.”
On Wednesday, investors will watch which measures will be taken to aid the economy and how much chancellor Rishi Sunak will dish out. Sunak will unveil in the House of Commons new investment to help “level-up” the UK economy and create jobs to drive the recovery from COVID-19.
The government’s one-year spending review will look at budgets for the next 12 months, potentially fleshing out last week’s green revolution announcement by prime minister Boris Johnson, covering key areas like energy, infrastructure as well as the NHS, education and other public services, particularly in the hardest hit parts of the UK.
Pledges include more than £1.6bn ($2.2bn) for local roads in 2021-22 to tackle potholes, congestion pinch-points and other upgrades as part of the government’s commitment to invest more than £600bn over the next five years.
Meanwhile, Britain is still in the waiting game, as Brexit negotiations were paused after a member of EU’s chief negotiator Michel Barnier’s team tested positive for COVID-19 last week.
But in more positive news, Britain and Canada agreed to keep trading under EU terms post-Brexit. Johnson and Canadian PM Justin Trudeau agreed the deal “in principle” in a video conference on Saturday.
Key company results:
Daily Mail (DMGT.L)— final (Monday)
Pets at Home (PETS.L) — interim (Tuesday)
Virgin Money (VMUK.L) — final (Wednesday)
Aviva (AV.L) — Q3 (Thursday)
Reach (RCH.L) — Q3 (Friday)
Watch: UK and Canada agree post-Brexit trade can continue under same terms as EU deal
US: What will markets be thankful for in the US? FOMC minutes and flash PMI’s
The focus in the US is all about the coronavirus, the release of the FOMC minutes and the US election.
The White House coronavirus task force is back in a sign that US president Donald Trump and his administration finally realise the catastrophic trajectory will continue to rise.
America has broken record infection rates, with many states seeing record new cases and their ICU’s at risk of running out of capacity. Cases across the US are nearing 200,000 a day.
Trump has made it clear that there will be no peaceful transfer of power to Democratic president-elect Joe Biden.
On Saturday a Pennsylvania court dealt a blow to his pursuits of getting the win in the state for Biden overturned.
A US judge dismissed Trump’s lawsuit, saying there was not enough evidence to support claims of fraud. Judge Matthew Brann said the suit, which rested on allegations of irregularities, was "without merit".
Data-wise, there is the flash manufacturing and services PMIs on Monday, with both sectors having held up well since returning to growth over the summer. Investors will be hoping for the trend to continue with an expectation of another pair of mid-50s readings, at worst.
Wednesday’s Federal Reserve meeting minutes might provide further indications that policy-makers are ready to increase their asset purchases and possibly target purchases at the longer-end of the curve.
Away from the economic calendar, and on the back of all the vaccine news buzz, COVID-19 headlines and any updates from Capitol Hill on a stimulus package will also interest investors.
Economy-wise, the most recent Q3 GDP numbers look set to be revised up to 33.2% on Wednesday, helping to further reverse the 31.4% decline in the second quarter.
Figures for US personal spending, which have strongly rebounded over the last five months are also on the slate for Wednesday, with expectations that the rebound continues as the country heads towards the Thanksgiving holiday.
Eurozone: Germany, France and Eurozone PMIs, ECB minutes
Monday will see the release of manufacturing and services PMI in the European Union’s biggest economies.
Germany’s October PMIs painted a mixed picture for its economy, with services slipping back into contraction territory of 49.5, while manufacturing moved higher to 58.2 — its best levels since March 2018.
It was a similar picture in France, with services remaining weak, slowing to 46.5 from 57.3 in July, as rising COVID-19 cases prompted localised and national lockdowns and restrictions across the country.
PMIs for the Eurozone as a whole are also out.
On Tuesday, Germany’s finalised Q3 gross domestic product (GDP) and November IFO Business Climate figures are out, the headline IFO Business Climate Index figure could be to a key driver.
On Thursday, German consumer sentiment figures for December are on the slate and October consumer spending and finalised third quarter GDP numbers from France wrap things up at the end of the week.
On the monetary policy front, the European Central Bank (ECB) meeting minutes will also provide direction on Thursday. ECB president Christine Lagarde is due to hold a speech at the online Frankfurt European Banking Congress, as we near the 10 December meeting when the Bank is set to unveil an expansion of quantitative easing (QE).