Indices: All scheduled events and news promise a very interesting week, but the highlight will be the Fed’s meeting which, among other decisions to be taken, will be the last one for Ben Bernanke as Chairman. Investors are anxiously anticipating the meeting as it can produce a decision on the long-debated issue about the future of the quantitative easing (QE) programme.
Rising speculations that a correction of the current $85 billion per month is on the way led to stock markets declines and US indices registered a second consecutive week on the red.
The S&P500 fell to 1,775 points, losing 1.68% of its value, while the Dow ended at 15,754, or 1.63% down. Under the pressure of a potential reduction of the QE, charts of the Nasdaq100 also turned red and the index lost 1.36% to close at 3,456 points on Friday.
Despite the decline of the main US indices, two of the most popular US companies, Facebook and Twitter, were riding a green wave as their shares created a real pre-Christmas rally. Facebook shares reached $53.30 on Friday, or a weekly rise by 11.21%, while Twitter, which recently made its stock market debut, reported an increase by the impressive 31.62%, with a Friday closing price of $59 per share.
In Europe, all major indices had a rough week. Germany’s DAX30 lost 1.87% from its value and closed just above the psychological level of 9,000 (at 9,028), while France’s CAC40 decreased by 1.82% to land at 4,066 points on Friday. Stock markets in Italy, Spain and the UK also traded on a negative territory, with weekly losses between 1.5% and 2%.
Forex
Trading on the Forex market was calm and without any significant chart movements. Only the Reserve Bank of Australia’s concerns about the economic situation in the country and the expensive Australian dollar led to continuing the downward trend of the AUD/USD, with the Aussie’s last quote on Friday night being 0.8959, or a drop by 143 pips for the week.
Commodities
On the commodities market, US crude oil futures for January delivery (WTI0114) fell by 0.9% to close at $96.09 per barrel on Friday, marking their lowest closing price since 3rd December. Meanwhile, Brent Crude oil for January delivery gained, albeit a modest 0.2%, to close at $109.12 per barrel, thus reducing its weekly loss to 2.5%.
What to expect this week?
Monday’s offers for the rest of the day include the Preliminary release of US Markit Manufacturing PMI for December along with the country’s Industrial Production for November and ECB President Mario Draghi’s speech.
Tuesday will have a lot on its plate, starring the Reserve Bank of Australia Meeting Minutes, the UK’s Consumer Price Index for November (YoY and MoM) and the Retail Price Index also for November (YoY and MoM). Other events for the day will also feature the Eurozone Consumer Price Index for November (YoY and MoM), Labour Cost for Q3, and the ZEW Survey for the Economic Sentiment (Dec) in the area. The US will also give its fair share in terms of economic events as the country’s Consumer Price Index will be announced. Wednesday’ main entries will come from the Bank of England Meeting Minutes as well as the UK’s Claimant Count Change and ILO Unemployment rate, both for October; US Building Permits and Housing Starts for November and the long-anticipated Fed meeting to close the day, along with New Zealand’s GDP (YoY and MoM). Thursday will see the release of the UK’s Retail Sales for November, the US Initial Jobless Claims and Existing Home Sales for November. Friday’s highlights will be the second day of the European Council meeting, the UK’s Gfk Consumer Confidence for December, the Bank of Japan Interest Rate decision, the UK’s GDP (YoY and QoQ), and the US GDP Price Index and the GDP Annualised for Q3.
Apart from the “blossoming” economic calendar, this week will also set the official start of the US Earnings Season for Q4. As Alcola (AA) is no longer part of the Dow, the kick-off will be given by Nike (NKE), with the company’s financial results due on Thursday. The rest of the week will see reports from Oracle (ORCL) and FedEx (FDX).
Further reading: Risks around the Fed
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