Oil prices fluctuate and reports suggest that 2019 was the worst year on record for British retail
Weekly market review and outlook: Markets on heightened nerves
Review: 6th – 10th January 2020
The first full trading week of the year was dominated by geopolitics rather than the usual outlook for the markets in the coming year from economists and analysts. Markets were on heightened nerves over the previous weekend following the US assassination of the Iranian General with oil prices shooting up. The Iranian’s retaliation saw Brent Oil touching $71 a barrel in the early hours of Wednesday morning, but the reaction seemed measured with neither the Iranians nor the Americans showing much appetite to escalate to a full scale war. As a result, oil prices dramatically slipped back to where they were prior to the drone strike leaving prices relatively unchanged over a week.
Stock markets did initially pull back but rather modestly and then rallied upon the de-escalation of the tension with the US markets setting new all-time highs. Data out of Europe though does not look too encouraging, especially the manufacturing situation in Germany.
In the UK there was a flurry of reports from key retailers for the crucial holiday season sales. Ahead of these came the report from the British Retail Consortium suggesting 2019 was the worst on record for the sector and the companies’ trading updates supported this view. All the traditional supermarkets reported falling sales as the German discounters continued to steal market share. In clothes retailing the picture remains dire as M&S struggled and continues to fail to make sound fashion choices and stock the right sizes, meanwhile the return of the founder at Superdry failed to turn sales around. There was better news though from Dunelm and JD Sports.
There was little out of the UK in terms of economics but Boris Johnson’s Brexit deal was easily passed in the Commons given his big majority and with the Lords unlikely to reject it, it’s now certain we will be leaving the EU on 31 January.
The Week Ahead: 13-17 January 2020
We still head into this weekend with geopolitical tensions at relatively high levels now that it’s looking increasingly evident the plane that crashed in Tehran on Wednesday was shot down rather than suffering technical failure while the Iraqis look to make progress in asking the US to leave the country.
In the UK economic data should come back to the top of news headlines again starting on Monday with the latest monthly and quarterly GDP figures. For November we may have seen the economy flat line for the second month in a row while both Industrial and Manufacturing data for the same month are likely to shows falls on a year over year basis.
On Wednesday we’ll have December’s inflation figures for which there will be a significant gap between the actual numbers (expected at around 1.5% ) and the Bank of England’s target rate of 2%.
On Friday, the poor numbers form the retailers are expected to show up in the latest retail sales figures for December, with Black Friday being reasonably good and drawing sales away from December we could have another fall for the month on month numbers, expected at around -0.6%.
Outside the UK we have the Chinese GDP figures to look forward to with the final quarter expected to show the economy growing at 5.9% while US inflation and retail sales will be worth following. The two biggest economies are also expected to sign on the Phase One of the trade agreement.
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