Announcements take the weekend by storm | Calamatta Cuschieri

Announcements by the US, France and Saudi Arabia left their mark on markets last Friday

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Calamatta Cuschieri
8 May 2017, 11:36am
Macron emerged as the president-elect, with 66.06% of votes in his favour
Macron emerged as the president-elect, with 66.06% of votes in his favour
On Friday, the United States announced, the jobless figures for the month of April, exceeding expectations with two hundred and eleven thousand people. The US government bonds were almost flat as investors seemed to focus more on wage growth and its implications for future interest rates rather than the better than expected increase in non-farm payrolls. In fact, the probability of the US Federal Reserve raising the cost of borrowing at its June meeting rose.

Europe’s focus was the second round of the French presidential election in which centrist Emmanuel Macron faced far-right candidate Marine Le Pen. Macron emerged as the president-elect, with 66.06% of votes in his favour. Tracking this, European markets closed higher. The CAC 40 jumped 1.12%, the FTSE was up 0.68% and the DAX rose 0.55%.

Meanwhile, energy prices traded in the red, continuing the downward trend from previous days, nearing the new five-month low. The continuous rise in the US stockpiles and a worse than expected decline in the US inventories triggered the decline in market confidence. However, during Friday’s session, oil reversed its losses as confidence increased with OPEC extending the output cut. This came when Saudi Arabia’s OPEC governor hinted the sentiment of the organisations towards the adoption of production caps beyond June.

This week

The French presidential election result dominates the agenda for the week, with the independent French centrist Emmanuel Macron reaching 66.06% of the vote. Marine Le Pen from her side said that her National Front Party would be completely overhauled. “The National Front … must deeply renew itself in order to raise to the historic opportunity and meet the French people’s expectations”.

During this week, we will also look at the Bank of England’s latest meeting, at which discussion should focus on the recent strength in the pound and the improvement in UK economic data. The Bank of England reveals its latest quarterly Inflation Report, containing new projections for economic growth and inflation, and simultaneously announces its policy decision. The expectation is for interest rates to remain on hold, but some policymakers have started to make a case for higher interest rates.

In the US, reports of the Consumer Price Index and Retail Sales come through at the end of the week. These will provide further clues about the economy and whether it has recovered from its ‘transitory’ Q1 weakness. This confirms signs of building inflationary pressures and the resilience of the consumer. This data will play a key role in determining the timing of the next policy move by the Federal Reserve.

Earnings season has begun to wind down in the US, but we do have full-year figures from BT, as well as half-year numbers from catering group Compass. Broadcaster ITV and housebuilder Barratt Developments round out the week for UK figures. 

This article was issued by Roderick Duca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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