FTSE 250: The mid cap index has been barely affected by the recent softness seen in the main FTSE 100 index and remains in a strong bullish medium and short-term trend.
It is one year since the US government came in and bailed out Freddie Mac and Fannie Mae. As events unfolded during Q4 of 2008 it would have been difficult to predict the optimism that investors are now demonstrating. Indeed, the turnaround in sentiment from the depth of despair and expectations of a 1930’s depression, to the focus now being on the green shoots of global recovery is quite remarkable. This optimism continued on Friday, with the non-farm payrolls data, whilst the unemployment rate hit a 26 year high, investors instead focused on the growing trend of smaller declines in non-farm payrolls and the improvement in temporary help. The weekend G20 meeting also provided a further boost to investor sentiment as there appears to be little drive to end the stimulus packages that have so far supported this recovery; this should start the week for risk assets off on a positive note, at least.
This week, in the US we have a relatively quiet week. Today, the US markets are closed for the labour day holiday. Later in the week, we are provided with more anecdotal evidence on the US economy performance with the release of the Beige book on Wednesday. Thursday we have trade balance whilst Friday sees Septembers’ University of Michigan data. In Europe, the main focus will be the release of Industrial production data which starts with Germany on Tuesday.
In the UK, attention will turn to Thursday’s MPC meeting where no change in a rates are expected. Before that, Tuesday sees the release of BRC retail sales. The resilience of the high street has been impressive but economists are now forecasting a small drop looking at 1.4%yoy down from last month’s 1.8%yoy. On the whole the risk to the 1.4% outlook is on the downside given the recent softness seen in the John Lewis Department store sales. Tuesday, also sees the release of industrial production. After last month strong +0.4%mom rise some weakness can be expected in this months figures with market expectations focused on a small drop to +0.3%mom. Wednesday, the UK releases its trade data with a small contraction expected to £-6.3bn and Friday sees the Producer Prices releases with the rise in crude oil prices likely to place upward pressure on input prices.
Sources: Reuters: BBC: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia:
Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.
