The Week Ahead

Italian Referendum Reactions

Monday started with a bang, with all eyes will be on the political landscape and how will markets react to the outcome of the Italian referendum on the Constitutional reform. As expected, the Italian nation voted ‘NO’ to Renzi’s reforms, and therefore we may see the European Central Bank (ECB) step in to provide stability by buying Italian bonds. In addition, there were also Austria’s presidential elections, which saw the far-right candidate Hofer conceding defeat to Van der Bellen.

ECB Policy Meeting

Moreover, another much-awaited event from the ECB is the policy meeting and the follow-up press conference by its chief Mario Draghi, on Thursday, which has a high relevance for financial markets and how will they interpret Draghi’s statements. The focus here will not be interest rate, which is hypothesized to remain at 0% but on whether quantitative easing is boosted.

Trade and PMI Figures

In terms of economic data, the main releases to watch out will be the US ISM services sector Purchasing Managers’ Index (PMI) for the month of November at the start of the week. Although, markets are acknowledging a rate hike on December 14, economic data will be monitored carefully for information on how US economy performed in the fourth quarter. Together with the US figures, the UK will be furnishing an equivalent UK services sector PMI due on Monday too.

The UK comes again in focus with the UK data on factory sector activity for the month of October and the UK visible Trade Balance figures announced on Thursday and Friday respectively. The UK trade balance presumed to drop from £5.2billion the previous year to £3.4 billion. Meanwhile, China will also be publishing its trade figures on Thursday, with last month exports falling 1.4% month on month, so another weak figure here could spark further worries about global growth. Germany will be releasing its trade balance on Friday, which is expected to drop into €20.2 billion from €24.4 billion a month earlier.

Other Central Banks

Tuesday and Wednesday will be the days assigned to Central Banks with the Reserve Bank of Australia and Bank of Canada to decide on interest rates. No waiver expected from the Reserve Bank of Australia keeping it neutral stance at the current rate of 1.5%. On the other hand, Bank of Canada may be varying the interest rate by cutting to 0.25% from 0.5%.

Corporates

TUI Travel group will be publishing it’s full year earnings, while Equipment Rental Ashtead, Bus services Stagecoach and Sports Direct provide half-year figures. The British online supermarket Ocado will break cover with its own trading update.