Weekly Market Outlook: Central banks, OPEC and Brexit take centre stage
While the market volatility from the US presidential election has settled down, it could start to pick up again this week with a range of different economic news announcements and releases.
However, Trump has not yet conceded defeat and Biden will not be sworn in till January. Brexit uncertainties still also remain. Vigilance will be key to navigating markets over the winter. Stay one step ahead by learning these ' Top 10 Risk Management Tips.'
This week is full of central bank speeches from the Reserve Bank of Australia Governor Lowe on Monday, Bank of England Governor Bailey on Tuesday and European Central Bank President Lagarde on Thursday.
Traders will also be focused on the OPEC meetings which are due to start on Tuesday, Canada's inflation report on Wednesday and the Australian employment figures on Thursday. It could be another very interesting week - are you ready?
- Global stock markets value soared to a record $95 trillion this week on Pfizer's coronavirus vaccine news.
- Boris Johnson's chief advisor Dominic Cummings and architect of the UK's Vote Leave campaign set to exit at the end of year, creating turmoil in the UK government.
- Trump fails to concede defeat and presses on with legal challenges of voter fraud.
- Amazon faces potential $28 billion fine in new antitrust case from the European Commission's Margrethe Vestager.
- Alibaba records largest ever sales event of more than $58 billion for Single's Day but was overshadowed by new Chinese antitrust regulations.
Source: Forex Calendar provided by Admiral Markets UK Ltd.
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Trader's Radar - UK Retail Sales & Brexit
At 7am GMT on Friday November 20, the UK releases its latest month on month retail sales figure. The market is expecting a fall of -0.4%, compared to a 1.5% growth rate last month. Lockdown restrictions have hurt the retail sector, while the government has extended job support schemes to March 2021.
However, the British pound is facing uncertainty from the outcome of this lockdown, a crumbling UK government and Brexit. UK Prime Minister's closest ally and chief advisor, Dominic Cummings, announced he is leaving at the end of the year. The news came as the Prime Minister's director of communications also resigned his post earlier in the week.
As both of them were key members of the Vote Leave campaign to leave the European Union, it puts a fresh question mark over Brexit talks as they enter the final stages of trade talks. While both countries have said progress has been made, there are still some very 'large differences' over state-aid, access to British fishing waters, regulations on workers' rights and environmental protection.
You can learn more in the ' Investing in the UK Stock Market After Brexit' article.
Source: Admiral Markets MetaTrader 5, GBPUSD, Weekly - Data range: from Dec 22, 2013, to Nov 13, 2020, performed on Nov 13, 2020, at 6:00 pm GMT. Please note: Past performance is not a reliable indicator of future results.
In the weekly chart above of GBPUSD, price is approaching key resistance at 1.3350. Price has struggled to break through that level on multiple occasions since 2018. A news of a trade deal would likely see price break through this resistance level.
However, even with the UK government crumbling, some ministers say their stance on the EU leaving the UK will not change and that the EU needs to adjust their stance. Traders want to be optimistic on the outcome but it's also wise to prepare for an upset. As price has been moving higher, it has created an ascending trend line which if broken could see further downside likely.
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Corporate trading updates and stock indices
Global stock markets recorded another impressive week with European indices leading the way. News that Pfizer's coronavirus vaccine drug had a 90% effectiveness in its trials sent investors piling back into stocks. Even sectors which were unloved during the pandemic - such as airlines and travel stocks - experienced a high amount of investor inflows.
The majority of US indices are now trading above or around their historic all-time high price levels. While Donald Trump is refusing to concede defeat, many analysts believe his unproven allegations of voter fraud will not affect the result. Therefore, markets may well be looking ahead to the future and upcoming holiday season.
You can learn more trading retail stocks during the holiday season in the 'Best Retail Stocks to Invest in' article. There are also some key earnings announcements from different companies this week which could add to some increased volatility. Here are just a few that are reporting this week:
- Monday - Vodafone
- Tuesday - EasyJet, Wal-Mart
- Wednesday - Nvidia Corp
Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from March 6, 2019, to November 13, 2020, performed on November 13, 2020, at 7:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
Last five-year performance of the S&P 500 circa: 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.80%, 2015 = -0.82%, 2014 = +12.32%
The above daily chart of the S&P 500 stock market index shows that price briefly attempted to break through its recent all-time price level at 3577. Since the breakthrough, price has settled back down below the price level. What happens here could be critical for the next few months.
If price remains below this level, then sellers could attempt a push back down to the ascending trend line on the chart. A break above the price level could see a strong run up which may well lead into the Santa Claus rally. The key is to look for the patterns, clues or indicators that show the strength of buyers or sellers.
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