Geopolitical updates again dominated moves last week, and that pattern looks set to continue into the coming days and weeks ahead. Sentiment had pushed higher during the course of the week, and we saw ‘risk on’ moves hit fresh levels towards the end of the week, with US stock indices closing the last three days at record levels and other risk assets pushing higher as haven trades unwound.
However, updates over the weekend, with news that Iran has again shut the Strait of Hormuz and Israel and Hezbollah have continued hostilities, have seen a sharp change in sentiment, and unless this flips again in the hours approaching the Monday open, then traders are expecting to see some sharp downside gapping once trading recommences.
Despite updates from the Middle East likely to dominate most moves in financial markets, there are also some key data releases, central bank updates, and quarterly earnings reports due out as we progress through the trading week, which will add strongly to the trading mix, especially from a longer-term perspective.
Here is our usual day-by-day breakdown of the major risk events this week:
Updates from the Persian Gulf over the weekend are expected to see some big moves on the Asian open on Monday, and although there are some key fundamental data updates as we progress through the day, geopolitical updates are expected to dominate. Chinese Loan Prime Rate updates are due midway through the Asian session, although their impact is expected to be minimal. There is nothing of note scheduled during the London session on Monday; however, Canadian markets will fall into focus early in the New York session with key CPI data due out.
Tuesday is busy on the calendar front, with some key updates due across all three sessions. The Asian session will see an early focus on New Zealand markets, with CPI data due out, whilst the European session sees the first of several key UK data updates for the week released, with the monthly employment numbers scheduled. The New York session sees the main US data for the week released, with retail sales data out early in the day, before we hear the key testimony from Fed Chair designate Kevin Warsh when he talks before the Senate.
It’s a quieter calendar day on Wednesday for the market, with just UK data again to the fore, with key CPI and PPI data due out early in the London session. The US session sees the weekly US crude oil inventory update, as well as speeches from the Buba’s Joachim Nagel and ECB President Christine Lagarde.
It is Flash PMI day on Thursday again, with both service and manufacturing numbers due out from several jurisdictions, including Australia, France, Germany, the EU, the UK, and the US. In addition to those data drops, the New York session also has the usual weekly unemployment claims numbers out.
It’s a quieter day on the calendar to round out the week. Retail sales data is due out from both the UK and Canada early in their respective trading sessions, and we also hear from SNB Chairman Martin Schlegel in the London session; however, traders will remain vigilant into the weekend for any geopolitical updates that could hit markets as liquidity thins in later sessions.
