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Week Ahead: COVID-19, Geopolitics, and A Busy Economic Calendar

16 November 2020

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By Deepta Bolaky
 @DeeptaGOMarkets

Amid the various claims of voting fraud and rigged elections, the former vice-president, Joe Biden who won more than 77 million votes so far, the most ever by a winning candidate, is set to become the next President of the United States. The immediate attention will remain on an orderly presidential transition while the country is rattled by a pandemic.

Equity Markets

The Election Aftermath and Vaccine Updates: Global equities rallied last week as investors digested a Joe Biden Presidency and a Republican Senate and positive vaccine updates. Markets welcomed the prospects that raising taxes or implementing major policy changes will likely be tempered by a divided Congress. At the same time, Pfizer and BioNTech announced that the vaccine has more than a 90% effective rate in preventing COVID-19. 

COVID-19 – More Lockdowns 

The number of coronavirus cases continues to increase in major economies. The situation in the US and across Europe is alarmingly threatening the reintroduction of more severe social distancing measures or state lockdowns across those countries. Global growth prospects are dire given the localised shutdowns that could last for more than a month. The vaccines news was well-timed which allowed investors to look beyond the spike in the COVID-19 cases. However, the rising number of cases remain a cause of concern for investors. 

US stimulus

A stimulus package to relieve the US economy with a divided Congress and the legal battles around the election outcome could prove challenging. Investors will keep monitoring the likelihood of some sort of fiscal package shortly. 

Brexit

Brexit headlines have been quite optimistic recently which helped investors to overlook the lockdown measures in the UK. However, the negotiators are still struggling to find a compromise on a major sector like fishing rights. Over the weekend, investors took note of a more downbeat tone and negotiations look set to go beyond the deadline. 

Asia Pacific Trade Deal

China, Australia, New Zealand, Japan and another 11 countries in the Asia-Pacific region have signed one of the biggest free trade agreements in history. The Asian-Pacific stock market will likely get a boost as it is the world’s largest regional free-trade agreement, encompassing nearly a third of the world’s population and gross domestic product. 

Key Economic Data to Watch

Retail Sales

On the economic front, all eyes will be on Retail Sales, a leading indicator which provides a glimpse into the upcoming quarterly GDP number. China, US and the UK Retail Sales will be released on Monday, Tuesday and Friday respectively. In a pandemic-induced environment, Retail Sales will be an important indicator to gauge consumer spending and the impact of COVID-19 and more nationals and localised lockdowns on businesses and consumers.

Central Bank Speeches

Central banks have been a key player in supporting the global economy during the pandemic. Investors will continue to monitor guidance and comments coming from central banks of major economies. A series of central bank speeches in the UK, US and Australia are scheduled across the week.  

Commodities

Oil

Crude oil prices found support on the back of the broad optimism in the markets following the US Presidential Election, the positive vaccine news which has boosted hopes of the global oil demand recovery amid lockdown measures and bullish weekly oil reports. 

More lockdowns and social distancing measures in major economies remain the key risk for the oil market. The attention will also be on OPEC and its commitment to production cuts. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading at around $40.44 and $43.02 respectively.

Gold

The precious fell sharply on vaccines updates and the US Congress gridlock. The XAUUSD pair recovered some ground last Thursday and Friday and is currently trading around the $1,890 level. Traders will likely monitor COVID-19 updates, leading economic indicators and geopolitical events – the US election legal battles and Brexit for fresh trading impetus. 

Key Events Ahead

Monday

  • Gross Domestic Product, BoJ’s Masai Speech and Industrial Production (Japan)
  • NBS Press Conference, Industrial Production and Retail Sales (China)
  • RBA’s Governor Lowe Speech (Australia)
  • BoE’s Haskel Speech (UK)
  • Fed’s Clarida Speech (US)

Tuesday

  • RBA’s Kent Speech and Meeting Minutes (Australia)
  • BoE’s Governor Bailey Speech and Ramsden Speech (UK)
  • Retail Sales, Industrial Production, and Fed’s Williams Speech (US)
  • GDT Price Index (New Zealand)
  • BoC’s Governor Macklem Speech (Canada)

Wednesday

  • RBA Governor Lowe Speech, Westpac Leading Index, HIA New Home Sales and Wage Price Index (Australia)
  • Merchandise Trade Balance Total, Imports and Exports (Japan)
  • Consumer Price Index, Retail Price Index, and PPI Core Output (UK)
  • Consumer Price Index (Eurozone)
  • BoE’s Haldane Speech (UK)
  • 10-yr Bond Auction (Germany)
  • BoC’s Wilkins speech, and BoC Consumer Price Index (Canada)
  • Building Permits, Housing Starts, and Fed’s Williams Speech (US)

Thursday

  • EU Leaders Summit (Eurozone)
  • Fulltime Employment, Employment Change and Unemployment Rate (Australia)
  • Industrial Production (Switzerland)
  • Jobless Claims, Philadelphia Fed Manufacturing Survey, and Existing Home Sales (US)

Friday

  • National CPI (Japan)
  • New Zealand General Election (New Zealand)
  • G20 Meeting and Consumer Confidence (Eurozone)
  • Retail Sales (Australia)
  • GfK Consumer Price Confidence, and Retail Sales (UK)
  • PBoC Interest Rate Decision (China)
  • Producer Price Index and German Buba President Weidmann Speech (Germany)
  • Retail Sales (Canada)

By Deepta Bolaky
 @DeeptaGOMarkets

Tuesday, 17 November 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 2.171 0.654 0.253 1.802 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 3.156 0 0 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.