Weekly Market Outlook

The highlights of the current week are carried by the first three days. Prepare for the German, the French and the UK’s manufacturing and services flash PMIs on Monday. On Tuesday, the focus will be on HP Q4 numbers and on the US consumer confidence data. Wednesday will bring the Federal Reserve’s minutes and the US personal spending and final Q3 GDP into the spotlight.

Germany and France November Manufacturing & Services Flash PMIs (Monday)

After the summer rebound observed in both Germany and France, contraction has started again in the services sector of the German economy, while manufacturing soared to 58.2 last month. The lockdowns in the country are likely to take a heavier toll on the November data.

In France, the developments have been similar, as lockdowns have been introduced around the country. Despite the recovery following the contractions in the second quarter, recent services PMIs indicate that the economy could be heading towards a cliff edge in the winter. Like in Germany, manufacturing has been pretty resilient.

UK November Manufacturing & Services Flash PMIs (Monday)

The UK’s economy fared better compared to those of other European countries, aided by later lockdowns and to August’s initiative “Eat Out to Help Out”. The concerns about a no-deal Brexit have not impeded the good post-lockdown performance. The Q3 manufacturing data stood at a really good level, though services figures declined a bit. This solid performance in Q4 could not be kept going forward, and October figures showed a slump, with local restrictions setting in. The November data are anticipated to deteriorate further. The services sector will take the worst toll, after the lockdown imposed in England on 5 November.

HP Q4 Results (Tuesday)

The sharp increase in working from home has led to a soaring in demand for home computers. HP reacted accordingly, and notebook and PC sales remained solid. But peripherals performed worse, especially printing devices sales, which have stayed bad in the last two quarters. Although HP has remained at the forefront, there are active and cheaper competitors, like Lenovo. For Q3, the best sales were of notebooks: a 32% rise. EPS forecasts for the last quarter are for $0.52.

US November Consumer Confidence (Tuesday)

The robust US post-lockdown rebound in retail sales came as a surprise. After the weak August consumer confidence data, there was a strong rebound in September, and the level was maintained in October. The uncertainty related to the recent presidential election did not impact that, and neither did the cease of the $600 weekly payment for households up to end-July. The November consumer confidence is anticipated to show resilience. The current concerns are mainly due to rising infection rates.

US FOMC Minutes (Wednesday)

As the Fed meeting was held post-election, there was uncertainty about the outcome and about the timing of any new fiscal stimulus plan. So the central bank reiterated a need for more fiscal measures by the US policymakers. The Fed just decreased the minimum loan size of their program, so that more small businesses can benefit from it.

The Fed committee members unanimously stated action should be taken as soon as possible to support the economy. This week’s minutes will perhaps shed light on what other monetary policy discussions were held, and what could be anticipated in the near future.

US Personal Spending and Final Q3 GDP (Wednesday)

Following the plummeting in personal spending in March and April, the last five months have brought a solid rebound. The forthcoming Thanksgiving week is bound to impact data positively too. The good figures are evident despite consumers already struggling and thus, resorting to their savings, which could not last indefinitely if further lack of fiscal support by the government persists. The Q3 GDP shot up by 33.2%, offsetting the 31.4% decline in the second quarter. The personal consumption rebound, by 40.7%, is the main reason for that. The question is whether the level could be sustained in Q4.