Flash February PMIs and UK January retail sales will be the highlights of a muted week

Flash February PMIs and UK January retail sales will be the highlights of a muted week

The past week, Coronavirus outbreak continued to attract all the attention. First US equities reached another record level on the back of a declining number of newly infected people. Then on Thursday, the rally in global equity markets came to a halt after the latest virus numbers showed a sharp spike in both infections and deaths in China’s Hubei province, the epicenter of contagion. However, most of the increase in new cases is owed to a change in methodology for counting infections in Hubei, not some dramatic acceleration in the spread of the virus, and the markets immediately recovered losses to close the week within breathing distance of its all-time highs. Risk sentiment will remain sensitive to any virus-related news, as the markets are still in the dark on full virus effect.

Midweek minutes from both the Fed and the ECB are due for release, but not much news expected in either. Following Chairman Powell’s testimony in Congress last week, the Fed minutes will be seen as somewhat out-of-date and will probably be ignored by traders.

On the data front, it will be somewhat of a muted seven days in the US, with mostly second tier releases making up the schedule, while the week will be a busy one in both UK and Europe.

In the UK, Jobs figures due on Tuesday will attract attention, and wage growth will be closely monitored too given the recent weakness in consumer spending. Retail sales for January due on Tuesday will be the first significant piece of hard data released for the country. Retail sales in the country have not grown since July of last year as households turned more cautious amidst the political turmoil generated by Brexit. A bounce in retail sales in January would suggest the decisive election outcome in December went some way in restoring confidence among consumers.

February PMI releases are set to attract a lot of attention on Friday, as there are set to be indications of the spill-over effects from the economic shutdown of China on the rest of the global economy. In the US, the big question is whether the manufacturing sector has taken a hit. The service sector could also be affected via transportation, restaurants and hotels due to less trading and fewer tourists. For the euro area, the new orders index will be key to spot any hit from the Chinese shutdown. The Eurozone economy, and specifically the German economy, is quite reliant on China as an export market, and thus, we may see further weakness in manufacturing sentiment in next week’s release.

In brief, expected economic highlights include:

Tuesday

– RBA Minutes (00:30 GMT)

– UK Average Earnings Index (09:30 GMT)

– German ZEW Economic Sentiment Index (10:00 GMT)

Wednesday

– UK CPI (09:30 GMT)

– Canadian CPI m/m (13:30 GMT)

– US Housing Starts (13:30 GMT)

– US Building Permits (13:30 GMT)

– US PPI (13:30 GMT)

– US FOMC Minutes (19:00 GMT)

Thursday

– Australian Employment Change (00:30 GMT)

– German Consumer Confidence (07:00 GMT)

– German PPI (07:00 GMT)

– UK Retail Sales (09:30 GMT)

– US Philly Fed Manufacturing Index (13:30 GMT)

– Crude Oil Inventories (16:00 GMT)

Friday

– French Flash Services PMI (08:15 GMT)

– French Flash Manufacturing PMI (08:15 GMT)

– German Flash Manufacturing PMI (08:30 GMT)

– German Flash Services PMI (08:30 GMT)

– EU Flash Manufacturing PMI (09:00 GMT)

– EU Flash Services PMI (09:00 GMT)

– UK Flash Manufacturing PMI (09:30 GMT)

– UK Flash Services PMI (09:30 GMT)

– Canadian Retail Sales (13:30 GMT)

– US Flash Manufacturing PMI (14:45 GMT)