Last week was a bloody week in the markets, with US equities selling off on fears that the market has been overstretched. The NASDAQ, Dow Jones, and the S&P 500 were down 4.52%, 3.66%, and 3.28%, respectively.
As we approach election season in the United States, traders should be looking out for changes in future policies which may whipsaw the market.
Investors and traders are heading into a turbulent start of the week, with Hong Kong/ China Tensions increasing as we get close to election season. This may incentivize countries like Australia and the United States to implement policy changes that many move the markets.
Leshgo! Here is your week ahead.
All dates are in NZDT.
It has been a turbulent week for Japan, as total Coronavirus cases are starting to creep up amidst Prime Minister Shinzo Abe's resignation. Furthermore, Typhoon Haishen just landed, causing more disruption to an already chaotic year. Analysts predict a significant drop in GDP growth by 28.6% - Brutal, considering the Japanese economy has been in the slump in the past couple of years.
With the European bloc having a relatively collective response regarding the pandemic, individual countries have started to release specific stimulus plans. For example, France revealed a 100 billion Euro stimulus plan, the biggest than any other country in Europe. The stimulus is just under 4% of its GDP. Analysts predict a 12.1% drop in their growth rate quarter over quarter, with the ECB expected to leave rates at 0%.
Canada has been relatively prosperous in trying to contain the Coronavirus without implementing a strict lockdown. In Quebec, the Coronavirus's epicenter earlier this year has stated that they plan to have students return to school as soon as possible. Economists predict the central bank to keep interest rates at 0.25%, with 80% of Economists surveyed by Finder expecting no rate change until 2022. Oxford Economists Tony Stillo and Michael Davenport stated that the Bank of Canada has signaled that they will keep the interest rates at 0.25% "until economic slack is absorbed so that the 2% inflation target is sustainably achieved."
As the United Kingdom continues to grapple with the Coronavirus, Prime Minister Boris Johnson insists that Brexit talks should continue with no delay. The United Kingdom has recorded over 347,000 Coronavirus cases, with the UK recording the highest number of daily Coronavirus cases today since May.
Similar to Japan, the United States has a turbulent couple of weeks ahead. With main market indices diving, traders and investors should brace for market volatility in the times ahead alongside election season getting into full swing. With the Federal Reserve pledging a new tool combatting inflation, these data figures may be too early to see whether this tool is working. However, a higher than expected figure than the market forecast of 1.2% may see Gold push higher alongside the dollar go lower.
Trade safe this week ahead.