Weekly Market Outlook

This week, there are two important days with key announcements, Tuesday and Thursday. The former will bring the German ZEW survey data and the UK unemployment and earnings figures in the spotlight. On Thursday, the UK is due to report its GDP for the third quarter. Later on in the day, investors will be keenly awaiting Cisco’s Q1 results.

German ZEW November Survey (Tuesday)

The German ZEW survey figure is likely to come out lower compared to the one released last month. A quick retrospection shows that the survey indicated a sharp plunge to a 20-year peak of 77.4 in September. In the next month, the index eased to a 5-month low. The late summer optimism stemmed from the belief that a second surge of the pandemic, and the massive lockdowns that would come with it, could be avoided. As it has subsequently become clear, such a belief was not justified, and the November data will surely reflect that, with restrictions on the German economy imposed until December.

UK Unemployment and Earnings (Tuesday)

The last ILO data indicated that unemployment was slowly rising. The increase from 4.1% to 4.5% observed in the three-month period until September was due to increasingly more employers cutting their costs. The furloughs had a share in the initial masking of unemployment’s ascent. Now, with the shutdown period to continue until March next year, many employers started to reduce their staff, so this week’s figures are anticipated to show that trend.

UK Q3 GDP (Thursday)

The country’s economy contracted by -19.8% in the second quarter, and private consumption plummeted by -23.6%. Although a rebound is seen in Q3, it is not expected that it will be enough to reverse the Q2 decline. October came with new restrictions, and they are continuing in November as well, so these will probably undermine recovery in Q4 data. Still, the gross domestic product for the third quarter is likely to show a moderate rise. 

Cisco Systems Q1 Results (Thursday)

Cisco’s earnings report in August was not upbeat. The company’s shares declined, after the management’s announced an expected revenue drop of 9-11% for Q1 compared to the same period last year. The announcement was surprising, given the good Q4 numbers, and end-of-year data beating expectations. With reduced revenue and profit anticipations for Q1, the management is preparing to effect a $1bn reduction in costs. The expected profit per share is about $0.70 per share.