11th August 2014 - Global Economic Week Ahead

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11th August 2014 - Global Economic Week Ahead

Major Global Indexes:

FTSE          6,602.39 (+0.53%)

DAX          9,112.86 (+1.10%)

Nikkei 225          15,130.52 (+2.38%)          Hang Seng         24,622.71 (+1.20%)

Dow Jones          16,533.91 (+1.13%)          S&P 500          1,931.59 (+1.13%)

Despite an upturn in geopolitical tensions markets are looking to continue higher today following on from a strong close in the US on Friday.

Indexes in Asia were positive as Russia said that their military exercises had completed near the border of the Ukraine and started to remove some of their forces from the region.

The Nikkei was up over 2%, recovering from the 3% drop seen on Friday and ahead of several important economic indicators and announcements due this week. The Bank of Japan releases its notes on monetary policy tomorrow along with their latest GDP figures. Many analysts believe that the data posted will show that they will have lost the majority of their gains from the first half of the year after their sales tax increase last April. Today's rally could simply be an initial reaction to news that Moscow is starting to back off from the Ukraine or investors looking to benefit before the BoJ makes its disappointing announcement.

It will be a busy week for the EU. Last week Mario Draghi at the ECB confirmed that the central banks interest rates would remain the same yet he is poised to start asset buying if needed. If the ECB started to print money and buy EU member bonds it would be in stark contrast to how the Federal Reserve carried out its QE and will no doubt be on the minds of investors as the week continues.

With the situation in the Ukraine seemingly nowhere near a conclusion, the impacts of sanctions from both sides are starting to be reported in a week that will see the Eurozone announce economic output for April - June for 18 of its members. On Thursday the ECB releases its data along with the Germany reporting its GDP. Both are expected to come under scrutiny and be a key gauge as to the true state of the European economy at this time.

In the US, markets are starting to head towards those record highs again as economic indicators suggest the economy is still expanding. Wednesday see's Retail Sales data which will indicate whether Americans are starting to spend their wages again, Thursday see's the release of Import/ Export data and some Jobless figures and Friday closes off the week with Industrial and Manufacturing data. With the Fed continuing to slow down on its asset buying program the real attention is now whether wages have started to increase with inflation.

It is fair enough to say that the economy is expanding, however if wages are staying stagnant them citizens simply don't have the extra funds to spend on the economy, thus if and when interest rates start to go back up, borrowing money will become far too expensive again and the Fed will be looking at this closely to see whether any policy changes are required. This along with the current issues the US has in the Ukraine and Iraq, to name just 2 will be very important to how the markets perform this week.

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DISCLAIMER  The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Stock Port Associates.All market data within this release is for your general information and enjoys indicative status only. Stock Port Associates does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.