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Big Week Ahead With Significant Figures From US and China
Forward, Tradeable | 06 January 2014
By: Justin Harper
Articles (23) Profile
By: Simeon Ang
Articles (125) Profile

The first full week of 2014 starts with a bang for the global economy with some crucial factory output figures due out along with the potentially game-changing non-farm payrolls data out of the U.S at the end of the week. We also have the minutes of the Fed’s policy meeting, although we already know that tapering has begun this month.

HSBC and Markit just released China’s purchasing managers’ index (PMI) for the country’s services sector. December’s reading came in at 51.2, down from 52.3 in November. This follows the fall in China’s official services PMI.

After testing a key 3,187 resistance level last week, the Straits Times Index has fallen back down to earth. Early morning trade seems to suggest that we will not be having a pointed upturn. The STI is still, however, in positive territory (probably due to bargain hunting) after Friday’s huge drop.

Read on to find out what’s in store for the trading week ahead!

What to Look Out for in the Next 7 Days…

In Singapore…

  • December Purchasing Managers’ Index

November’s PMI reading caused a little concern for economists, coming in at 50.8 for the month, down from the 51.2 recorded in October. Economists said this was due to front-loading as much of Singapore’s factory output happened earlier in the year.

The good news is that this perceived slowdown has done little to affect GDP which grew by 3.7 percent last year, in the top end of official forecasts. So whatever the December PMI print looks like, it probably means Singapore enjoyed pretty stable and healthy economic growth last year.

We also have foreign exchange reserves data due out but this is unlikely to influence trading.

Around the World…
In the US, look out for,

  • November factory orders, trade (goods and services)
  • FOMC minutes from December meeting
  • ADP employment figures for December
  • Non-farm payroll data for December

It is going to be a busy week for the world’s largest economy starting on Tuesday with November factory orders, alongside trade figures for goods and services.

Factory orders did slip 0.9 percent in October , compared to the previous month, which was put down to weak aircraft demand.

On a positive note, trade figures saw an improvement with a shrinking of the trade deficit to US$40.6bn in October. It is hoped November’s print continues this trend.

Likely to overshadow these will be employment figures with the ADP private employment report followed by non-farm payroll data on Friday. November’s non-farms figure came in at a better-than-expected 203,000 jobs created.

This helped to bring down the unemployment rate to 7 percent. Which, of course could have given the Federal Reserve more impetus to announce that tapering of its bond-buying programme would begin in January. The taper begins this month with a scaling back of bond purchases by US$10 billion to US$75 billion.

There could be more details from the Fed’s Open Market Committee (FOMC) meeting from last month but essentially we already have the key details – when and by how much. But the minutes will still be keenly read for any more clues to tapering this year.

In Europe,

  • PMI Markit composites
  • November unemployment

Things have also been looking a little rosier in the Eurozone as well. PMI manufacturing data for November came in at a fairly healthy 51.7. Although this was slightly down on October’s reading, it is well above the 50 point watershed level which signifies expansion.

We also have unemployment figures which are not in a healthy condition, at just over 12 percent. This stubbornly high figure, which is even higher for youth unemployment, could be the stumbling block in the Eurozone’s recovery.

In China,

  • Trade balance for December
  • December CPI

The world’s second biggest economy also has some important data due out this week. Trade figures have been upbeat as of late and Asian economists will hope this continued in December.

November saw the trade surplus increase to US$433.8 billion as exports grew 12.7 percent while imports grew by 5.3 percent. This puts the Chinese in a strong position compared to its global peers.

It has also seen inflation start to ease. The consumer prices index (CPI) dropped to 3 percent in November, a slight drop from the previous month.

Scroll down to our Calendar below to find out more about the exact dates of these figures release as well as other important economic data.

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This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.

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