Eurogroup meeting and manufacturing PMI?s in focus
By Michael Hewson (Senior Market Analyst at CMC Markets UK)
The first week of December is set to be a key
week for financial markets with a whole host of important economic data announcements, central bank meetings and policy statements which investors will have to digest as we head into year end.
Having seen November Chinese manufacturing PMI data improve over the weekend the hope is we see a similar trend in Europe and the US today.
This week we not only we have manufacturing data from all over Europe, the UK, the US and China, but we also have central bank rate meetings in Australia, Canada, Europe, and the UK, the latest Autumn
Statement from the UK Chancellor, as well as key US
unemployment data at the end of the week.
We start the week off in Europe as we have done for most of this year as policymakers here grapple with a debt crisis which has crippled economic performance from the southern periphery to the northern core.
Today?s latest Eurogroup meeting will be focussing on finessing the latest details of the Greek
bailout, particularly the controversial voluntary
debt buyback scheme on the remaining ?60bn of bonds still in private hands, the success of which will determine the outcome of the latest bailout plan.
Given that these private bond holders have already seen their holdings undertake a haircut once already this year, they could well resent being asked to take yet another loss on their holdings, while EU governments continue to refuse one of their own.
The poor performance of the European economy for November is also expected to be confirmed today by the final Manufacturing
PMI?s for France, Germany, Italy, Spain and the Eurozone area as a whole.
There is an expectation of slight improvement in Spanish
and Italian PMI albeit from a very low level with Spanish PMI expected to improve from 43.5 to 43.9, which Italian PMI is also expected to improve to 46 from 45.5.
French, German and Eurozone manufacturing PMI?s are expected to remain unchanged at 44.7, 46.8 and 46.2 respectively.
These recessionary levels of economic activity and output highlight the problems facing Europe?s leaders, which they seem increasingly oblivious to. They refuse to acknowledge the reality that Greece remains insolvent, and no amount of fiddling around the edges will fix its finances.
Meanwhile the lack of any policies to tackle rising unemployment and falling economic activity continues to take a back seat to the question of who gets bailed out next, with Cyprus the next in line.
In the UK the latest manufacturing PMI for November is expected to show a small improvement to 48.1, from October?s 47.5, with the weak activity in the sector expected to focus the markets attention on Wednesday?s Autumn Statement where the Chancellor of the Exchequer, is expected to have to shift his targets for a balanced budget further out into the decade as economic activity continues to underperform and tax revenues decline.
In the US while the main focus remains on the deadlocked fiscal cliff negotiations, which continue to roil the markets in both directions, the economy continues to tick along slowly, though this afternoon?s ISM Manufacturing reading for November could take a hit from last month?s storm related events caused by Sandy.
Analysts do appear to be underestimating the effects of last month?s storm though, if their predictions are anything to go by, predicting that activity for November will drop from 51.7 in October to 51.5.
Equity market calls
FTSE100 is expected to open 18 points higher at 5,885
DAX is expected to open 28 points higher at 7,433
CAC40 is expected to open 17 points higher at 3,574