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15 Sep 2011
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Week Ahead: All eyes on European leaders, corporate earnings and China’s economy in focus
The week ahead in business and finance
Investors await action from European leaders – The Greek sovereign debt crisis will remain at the
forefront of investors’ minds this week. Overnight, Germany’s Angela Merkel and France’s Nicholas
Sarkozy met to discuss next steps in averting a regional crisis. Both leaders were tight-lipped on the
details of their discussions except to say that they have agreed on a plan to support the region’s banking
sector. The comments should support investor sentiment towards financials when markets begin trading
this week. Financial support for the major European banks is crucial if an orderly default on Greek
government debt were to eventuate.
Further developments on the crisis are likely over the coming days, ahead of the European Union
summit which is due to take place on 17-18 October. Greek leaders will be doubling their efforts to
convince the troika of the effectiveness of their policy actions. Significant spending and taxation reforms
in Greece are conditional upon receiving the next tranche of bailout funds.
Greek debt aside, the European quarterly earnings season commences this week, headlined by results
from French major retailer, Carrefour, and luxury goods manufacturer, Burberry. Investors will be
interested in the state of domestic consumer demand and the impact current woes on the economy are
having. In the case of Burberry, investors will be interested in management’s view on earnings
prospects, particularly in its major markets like China.
Complementing earnings results will be a range of key economic data points covering inflation, industrial
production and merchandise trade.
Asia awaits developments in Europe; China and Australia in focus– Asian investors are again likely
to be heavily influenced by developments offshore this week. That aside, investors are likely to hone in
on the latest reports on China’s economic performance, due out later this week. China’s trade balance
will be out on Wednesday, while the latest inflation figures are due for release on Friday. The consumer
inflation rate eased to 6.2% in August from 6.5% in July, and the cooling trend is expected to continue for
the September numbers.
In Australia, a range of economic indicators will be released this week, commencing with the latest ANZ
Job Advertisements survey and the National Australia Bank’s Business Conditions survey. These will be
followed by a consumer sentiment survey on Wednesday and the all-important labour market statistics
on Friday. While Australia’s low unemployment rate has been the envy of other developed markets, it
has begun to move higher, edging up to 5.3% in August from 5.1% a month earlier.
1
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment. Investment
involves risks. In general fluctuation in the performance of emerging markets is normally higher as it tends to be
more volatile than other developed markets. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
15 Sep 2011
19 Sep 2011
The Bank of Korea is due to meet this week to review interest rate settings. Although the nation’s
inflation is trending above the target range, the board is unlikely to announce a further rate hike
while global markets remain unsettled.
US earnings season kicks off, Obama to push through new stimulus – The unofficial start to
the US earnings season will draw US investor attention this week. Following the close of trade on
Tuesday, Alcoa will report its quarterly earnings, followed by Google and JP Morgan Chase on
Thursday. Current estimates for S&P500 companies suggest investors will see 12% growth in
earnings this quarter. Investor sentiment has however been severely dented by the economic
troubles both domestically and abroad, which may limit any upside arising from favourable
earnings results.
President Barack Obama will be doing his utmost to convince key senators of the merits in
passing his US$447 billion jobs package. The “American Jobs Act” combines more funding for
unemployment assistance and infrastructure and spending cuts in other portions of the budget,
among other items. More evidence of the need to support the labour market came through on
Friday, when the latest payroll data showed the national unemployment rate remained unchanged
at 9.1%, despite 103,000 new jobs being created.
Other areas of interest this week will be the minutes from the latest FOMC meeting as well as
retail sales, consumer sentiment and the Empire State manufacturing surveys, due out later this
week.
Market volumes are expected to be light today owing to a US public holiday with markets to
remain open.
2
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment. Investment
involves risks. In general fluctuation in the performance of emerging markets is normally higher as it tends to be
more volatile than other developed markets. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
15 Sep 2011
19 Sep 2011
Summary of key economic events
Central Bank Activities
8-Oct
US
US Federal Reserve's Dennis Lockhart speaks on economy in Atlanta
11-Oct
Indonesia
Bank Indonesia announces reference rate
12-Oct
US
US Federal Reserve releases minutes of FOMC meeting
Australia
Reserve Bank of Australia's Guy Debelle gives speech to Forex Market Conference in
Sydney
US
US Federal Reserve's Charles Plosser speaks on Economy in Philadelphia
13-Oct
14-Oct
Japan
Bank of Japan to publish minutes of September board meeting
US
US Federal Reserve's Narayana Kocherlakota speaks in Sidney, Montana
Americas
12-Oct
US
Minutes of FOMC meeting
13-Oct
US
Trade Balance
US
Initial Jobless Claims
14-Oct
US
Advance Retail Sales
15-Oct
US
University of Michigan Consumer Confidence survey
17-Oct
US
Empire Manufacturing Survey
Asia Pacific
10-Oct
Australia
ANZ Job Advertisements survey
11-Oct
Australia
NAB Business Confidence survey
China
New Yuan loans
12-Oct
13-Oct
Japan
Trade Balance
Japan
Bank of Japan Monthly Economic Report
Japan
Consumer Confidence
South Korea
Producer Price Index
Australia
Westpac Consumer Confidence survey
India
Industrial production
Japan
Machine Orders
Singapore
Gross Domestic Product
South Korea
Unemployment rate
Australia
Unemployment rate
China
Trade balance
South Korea
Bank of Korea Monetary Policy Committee Meeting
14-Oct
China
Producer Price Index
Singapore
Retail sales
16-Oct
Australia
Reserve Bank of Australia board meeting minutes
17-Oct
Australia
New motor vehicle sales
Japan
Industrial Production
France
Industrial Production
Germany
Current Account
Germany
Trade Balance
UK
Nationwide Consumer Confidence
Germany
Wholesale Price Index
Europe
10-Oct
11-Oct
12-Oct
3
UK
Industrial Production
UK
Trade Balance
France
Consumer Price Index
France
Current Account
UK
ILO Unemployment rate
13-Oct
Euro-zone
European Central Bank publishes monthly report
Germany
Consumer Price Index
14-Oct
Euro-zone
Consumer Price Index
Euro-zone
Trade Balance
Sources: Bloomberg, FIL Limited
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment. Investment
involves risks. In general fluctuation in the performance of emerging markets is normally higher as it tends to be
more volatile than other developed markets. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
15 Sep 2011
19 Sep 2011
Performance of major US stock market indices
Index
Standard and Poor's 500
Dow Jones Industrial Average
NASDAQ Composite
Source: Bloomberg
1-day Performance
-0.82%
-0.18%
-1.10%
Index close
1,155
11,103
2,479
US markets
US stocks decline despite uplift in labour market – After a day of choppy trading, stocks in the
US ended the day lower despite some relatively upbeat employment data amid renewed concerns
about the financial situation in Europe. The Dow Jones Industrial Average edged down 0.2%, while
the S&P and Nasdaq were down 0.8% and 1.1%, respectively. However, despite the losses on the
day, the Dow advanced by 1.7% for the week, while the Nasdaq advanced 2.6% and the S&P
gained 2.1%.
The key September employment situation report showed stronger than expected job growth as well
as upward revisions to the data from previous months. Total non-farm payroll employment
increased by 103,000 jobs, as the addition of 137,000 private sector jobs more than offset the loss
of 34,000 government jobs. The overall job creation figure far exceeded the 65,000 expected. The
revised data for August showed that 57,000 jobs were added rather than the zero initially reported.
July figures were also upwardly revised to show an increase of 127,000 jobs. Despite the stronger
than expected job growth, the unemployment rate remained at 9.1% in September, unchanged from
the previous month.
4
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment. Investment
involves risks. In general fluctuation in the performance of emerging markets is normally higher as it tends to be
more volatile than other developed markets. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
15 Sep 2011
19 Sep 2011
Performance of major European stock market indices
Index
Stoxx 600 Index
FTSE 100
DAX
CAC 40
Source: Bloomberg
1-day Performance
+0.75%
+0.23%
+0.54%
+0.66%
Index close
232
5,303
5,676
3,096
European markets
European stocks move higher – European stocks were up for the day and for a second week.
Gains were modest Friday, supported by hopes that political leaders are getting serious about
containing the region's sovereign debt problems. Morale on Friday was lifted by the better than
expected US employment report. London’s FTSE was up 0.2% on the day and 3.4% on the week
while France’s CAC gained 0.7% and 3.8%. Germany’s DAX advanced 0.5% Friday and 3.2% for
the week and the SMI edged up 0.2% and was 2.2% higher on the week.
After markets here closed, Fitch cut Italy's credit rating by one notch to A+ from AA- while it cut
Spain's credit rating by two notches to AA- from AA+. The agency also said that the outlook is
negative. Earlier, Moody's cut the ratings of 12 UK banks saying there is a lower probability that the
government would support financial institutions if they need it. RBS, Lloyds and Barclays were
down. Moody's also downgraded several Portuguese banks, citing increased risk from their
exposure to sovereign debt, deterioration of domestic asset quality and liquidity strains.
5
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment. Investment
involves risks. In general fluctuation in the performance of emerging markets is normally higher as it tends to be
more volatile than other developed markets. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
15 Sep 2011
19 Sep 2011
Commodities and currencies
Commodity
Crude oil 1-month futures
Spot Gold
Thompson-Reuters/Jeffries Commodity Index
Source: Bloomberg
Close
$82.98
$1,637.85
304.75
Change
+0.47%
-0.82%
-0.40%
Currency
Japanese yen
Australian dollar
Euro
British pound
Canadian dollar
Source: Bloomberg
Close
76.73
0.9768
1.3378
1.5562
0.9620
Change
-0.01%
+0.23%
-0.44%
+0.76%
+0.23%
Closing Yield
+2.08%
+2.47%
+2.0%
+0.99%
+4.31%
Change
+0.09%
+0.08%
+0.06%
+0.01%
+0.07%
Bond markets
10-year Government Bond Futures
US
UK
Germany
Japan
Australia
Source: Bloomberg
6
To know more, visit www.fidelity.com.hk
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide Investment. Investment
involves risks. In general fluctuation in the performance of emerging markets is normally higher as it tends to be
more volatile than other developed markets. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.