We share our views on the market movements for the week commencing 27 January and outlook for week commencing 3 February.
Weekly market review: Market movements
Review: 27 – 31 January 2020
One issue dominated the news headlines globally and ultimately the market’s direction which is the spreading of coronavirus in China. As parts of China become effectively shut down, economic activity takes a big hit and with transportation networks suspended, the price of oil has fallen by over 10% since the news became mainstream.
There were other important events; US policy makers kept interest rates on hold as expected and this was somewhat justified by the latest set of Q4 US GDP figures. Here in the UK though the chances of a rate cut was 50-50 ahead of the decision. In the end Mark Carney and Bank of England policy makers decided to leave rates on hold citing recent data which suggested the UK economy was not slowing as fast as earlier feared.
By the end of the week we had news that coronavirus has spread to other parts of the world including a confirmation of two cases here in the UK. As we head into the weekend Britain’s exit from the EU will not gather as much attention as it should have, markets will be more concerned as to how authorities around the world cope with containing the virus.
The Week Ahead: 03 – 07 February 2020
Investors and traders should be braced for more market volatility on Monday morning should coronavirus spread further over the weekend. We have the publication of forward-looking PMI data for various sectors in key regions around the world for January and the data for China is likely to be in focus. This should capture the views of purchasing managers as the virus began to take hold and is expected to show a dip in confidence in the manufacturing sector. In the UK only the services sector PMI is expected to show expansion while manufacturing is expected to show modest falls while construction sector levels should still be at concerning levels.
The other key data point will be the latest set of US jobs numbers which are expected to continue showing a robust US labour situation with the markets pricing in another 150,000 jobs being created in January with the unemployment rate sticking at 3.5%.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.