Weekly Recap & Upcoming Market Movers – 29th October 2018

Last Week Recap

Last week the global stock market endured another wave of sell-down. The Dow Jones Industrial Average was down -3% for the week, while S&P 500 slumped -3.9%. Both the Dow and S&P turned gave back all their gains and turned negative for the year. Disappointing earnings from some of the big companies like Amazon and Alphabet set off concerns from investors that company earnings have peaked, leading to the brutal sell-off in October. Investors are also on edge about the upcoming mid-term elections in November.

Technically things are looking gloom for the Dow Jones Index in the short term, prices broke though the support at 25000 and the next support could be seen at 24400. Should the market continue to sell off, we will be looking at an extremely strong support area that held up the market from February to May, price in the region of 23570. Fundamentally wise we believe the economy is still strong backed by solid GDP growth, low unemployment rates and strong corporate earnings. We will be taking this opportunity to add to our long positions in equities. Expect a 1% or more swing to be the norm in the stock market in this current market condition.

This Week Ahead

This week will be an extremely packed week filled with major economic data release and central bank rates announcement. Apple, Facebook and eBay will be reporting their quarterly earnings this week. Following last week disappointing earning figures by Amazon and Alphabet, Apple’s and Facebook’s earnings will be closely paid attention to. The US jobs report will be released on Friday and the focus will be on the average hourly earnings. With the US economy close to “full employment”, a strong increase in the hourly earnings will be sending a strong message that the US economy is blooming. It would mean that employers are now offering a higher wage to attract and retain workers from a shrinking labour pool.

We also have the Bank of England and the Bank of Japan rate decision this week. Both the BoE and BoJ are expected to keep their rates on hold.

Other Notable Economic Data 

Monday – US Core PCE Price Index

Tuesday – US CB Consumer Confidence

Wednesday – Australia CPI, Canada GDP, US ADP Non-Farm Employment Change

Thursday – UK Manufacturing PMI, US ISM Manufacturing PMI

Friday – Australia Retail Sales, Canada Jobs Report

Vincent Foo

Vincent was an ex-proprietary trader and now is a full-time trader at a family fund. He trades the futures market and specializes in bonds and commodities.

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