- A truncated trading week to end 2019 and start 2020 last week, with global markets observing holidays during the turn of year.
- 2019 ended and 2020 initially started by echoing the “risk on” tone from the whole of last year with global stock averages extending the December, Santa rally through the end of year, albeit with a small dip at year end and then a surge on Thursday to start 2020.
- US equity averages hit record highs on Thursday 2nd January with other global stock indices also strong, after positive soundings that the US-Sino trade deal will be signed on 15th January.
- However, the start of year bullish sentiment was quickly dented by the increase in geopolitical risks from the US airstrikes on Iran.
- Global averages plunged lower to end last week on Thursday-Friday, whilst the safe haven Japanese Yen rallied (USDJPY lower) and with “risk currencies”, the Australian and New Zealand Dollars selling off (AUDUSD and NZDUSD lower). Oil spiked higher!
- This leaves markets in a “risk off” theme going into the first full trading week of the year.
- Furthermore, there has been a renewal of tensions over the holiday period between the US and North Korea.
- Elsewhere, the U.S. impeachment process is in a “wait and see mode”, as the House of Representatives voted for two articles of impeachment at the end of 2019, though the articles of impeachment have yet to be transmitted to the Senate, so as yet no dates or agenda have been agreed for the Senate impeachment trial.
- The impact on financial markets of the impeachment process remains negligible, as the Republican controlled Senate is unlikely to vote with the two-thirds majority required to impeach the President.
Key this week
- The geopolitical focus will be on both sides of the Iran-US conflict, with any developments likely to have significant impact on financial market assets.
- Also, markets will be watching North Korea and separately any developments for the impeachment trial agenda.
- And regarding data, the key foci will be on Monday’s Global Markit Services and Composite Purchasing Managers Index (PMI), Tuesday’s US ISM Non-Manufacturing PMI and Friday’s US Employment report for December.
|Date||Key Macroeconomic Events|
|06/01/20||Global Markit Services and Composite Purchasing Managers Index (PMI)|
|07/01/20||Euro Zone Retail Sales and Consumer Price Index (CPI); US ISM Non-Manufacturing PMI|
|08/01/20||US ADP Employment Change|
|10/01/20||US and Canada Employment reports|