In the Global Week Ahead, to find the biggest fundamental catalyst for stock markets, target the usual suspect at the top of a month – the latest U.S. non-farm payroll report.
On Wednesday, the ADP private payroll report lands. This is a foreshadowing of the preliminary Federal number out on Friday.
What’s the backdrop going into the report? Last week’s U.S. unemployment claims remained low at 238K. A lagging indicator is the U.S. household unemployment rate. It rests at 4.1%. That’s low too.
So Friday’s economist consensus sees monthly job additions number at around +200K for November. That’s a muddle-through call.
Nonetheless, this updated coincident indicator will get studied in great detail.
Perhaps the most closely watched internal numbers become the annual wage growth figures. These are a ‘tell’ on any future pickup in U.S. consumer inflation. In turn, that would get the Federal Open Market Committee’s full attention.
In the halls of Congress, the U.S. is still a fair distance from enacting a tax plan.
The Senate version and House version now go into ‘conference.’ In this set of joint meetings, the House and Senate hash out a common agreement to bridge differences. They will re-submit a single proposal to both chambers.
This Friday, there is an expiring deadline on funding needed to keep the U.S. government open. In other words, a debt ceiling and spending appropriation deadline looms. This opens up a rather small possibility of a government shutdown.
Not to be put on a back burner, the Mueller investigation can surely intensify.
Across the Global Week Ahead, central banks outside the USA will make important policy rate setting decisions.
On Wednesday, in Latin America, consensus expects the Banco Central do Brasil to cut its Selic monetary policy rate by 50 basis points.
Last week, South Korea became the first major Asian central bank since 2014 to hike interest rates.
That was a sign the ‘great unwinding’ of crisis-era low interest rates are spreading. Resurgent growth in Europe and the U.S. has benefitted Asia.
Who is next? Further south, count on Australia to keep rates on hold this week. Focus instead on whether there is any hint of a possible hike next year.
Reserve Banks in Canada and India also hold monetary policy meetings prior to the U.S. payroll report.
Top Zacks Stock Picks—
Some stocks to watch…
Rio Tinto (RIO - Free Report) : China is getting Asia moving. That keeps materials companies busy. This stock is a $67 billion market cap iron ore mining company based in western Australia. The stock carries a Zacks long-term VGM score of A.
ConocoPhillips (COP - Free Report) : Don’t forget about the latest rise in global oil prices. This U.S. based oil and gas integrated player is a Zacks #1 Rank now. It has a long-term Zacks VGM score of C.
Lam Research (LRCX - Free Report) : Yes, the semiconductor stocks got hit hard last week. This week, keep a close eye on the trading action in this industry. This widely held stock is back to a Zacks #1 Rank, and the long-term Zacks VGM score is A.
That set of stock metrics says the fire will be re-lit on semi chip stocks soon.???
Key Global Macro—
The biggest fundamental catalysts this week come from the U.S. jobs market.
On Wednesday, the ADP private payrolls report will be released.
On Friday, the key non-farm payroll report for the USA lands. Consensus looks for moderate job gains of around a 200k monthly pace for November.
Given the tightness in labor markets, wage growth could accelerate.
On Monday, Greece’s GDP growth rate should be +0.8% y/y. Meanwhile, Turkey’s Consumer Price Inflation is running hot at +12.98% y/y.
On Tuesday, the monetary policy base rate in Poland gets re-set. It should remain at 1.5%.
The Reserve Bank of Australia should keep its overnight rate at 1.5% too.
The Irish services PMI rests at 57.5. We get a new reading here.
The Spanish services PMI rests at 54.6. It gets re-set too.
The German services PMI rests at 54.9. It gets re-set.
The Eurozone composite PMI rests at 57.5. We get the final reading. Eurozone services rests at 56.2.
Retail sales in the Eurozone stands at +4.7% y/y. We get a fresh reading.
On Wednesday, the Bank of Canada (BoC) holds a monetary policy meting. Its latest policy rate is at 1.0% and is not expected to change.
The Reserve Bank of India (the RBI) holds a monetary policy meeting too. The reverse repo rate stands at 5.75% and it is not expected to move.
The U.S. ADP employment survey comes out. It was at +235K.
The ECB’s Draghi speaks in Brussels.
On Thursday, the unemployment rate for Italy comes out. It has been at 11.2%.
The unemployment rate for Greece is 20.6%.
U.S. initial claims look low at 238K, once again.
Mexico’s closely watched inflation rate comes out. It has been at +6.37% y/y and could climb to +6.59% y/y.
On Friday, the key U.S. non-farm payroll report lands. The prior reading was 261K, and the unemployment rate was 4.1%.
The University of Michigan consumer sentiment index is at 98.5. We get a fresh reading.