World Week Ahead Data may help extend rally

Monday 25th November 2013

The Wall Street party is poised to continue as investors head into a Thanksgiving-shortened week culminating in Black Friday which will show if the American consumer is confident enough of the outlook to spend big this holiday season.

In the past five days, the Standard & Poor's 500 Index rose 0.37 percent, the Dow Jones Industrial Average climbed 0.65 percent, and the Nasdaq Composite Index added 0.14 percent.

Both the S&P 500 and the Dow closed at record highs on Friday; the S&P 500 finished above 1,800 points for the first time.

"More and more people are discounting that the potential tapering is not going to totally derail this market," Daniel Genter, president and chief executive officer of Los Angeles-based RNC Genter Capital Management, told Bloomberg News. "There is life after tapering."

Indeed, US Federal Reserve policy makers have been at pains to make clear that they won't abandon their easy money stance, even as they start to rein in a US$85 billion monthly bond-buying program.

"We are going to remain very accommodative for quite some time, in all likelihood a number of years," Atlanta Fed Bank President Dennis Lockhart told CNBC on Friday.

In the past 12 months, the Dow has gained 25 percent while the S&P 500 has added 29 percent, and the month of December might have more gains in store.

"The market finally feels comfortable about not having a meaningful correction [this year], that it's OK not to, as we enter a traditionally strong time of the year," Ryan Detrick at Schaeffer's Investment Research told Reuters.

US markets will be closed on Thursday and part of Friday for the Thanksgiving holiday.

The coming days will offer a slew of economic data including the latest on the real estate market.

The pending homes sales index is due on Monday, followed by housing starts, the FHFA house price index, and the S&P Case-Shiller home price index on Tuesday.

Other reports include the Dallas Fed manufacturing survey, due Monday; consumer confidence, and the Richmond Fed manufacturing index, due Tuesday; and, durable goods orders, jobless claims, the Chicago Fed national activity index, Chicago PMI, consumer sentiment, as well as leading indicators, due Wednesday.

In Europe, the Stoxx 600 Index slipped just under 0.1 percent for the week. While not quite matching the gains on Wall Street this year, the Stoxx 600 has climbed 15 percent as investors and policy makers alike have become increasingly confident the worse of the euro-zone's sovereign debt crisis has passed.

"The euro is stable, financial markets are no longer concerned about the future of the euro zone and there are no risks of contagion anymore," German Finance Minister Wolfgang Schaeuble said on Saturday, according to Reuters. Schaeuble spoke at a conference organised by German newspaper Sueddeutsche Zeitung in Berlin.

At the same event, Greek Prime Minister Antonis Samaras indicated his country did not need another bailout, saying "I think that this is enough. We don't need something else-we don't need another program-we just have to stick by this program." A day earlier Samaras said the country is on track to start repaying its international creditors.

Better-than-expected German business confidence data on Friday helped bolster the euro 0.6 percent against the greenback and 0.7 percent against the yen.

In the coming days, investors will eye reports on German consumer sentiment, due Wednesday; German unemployment and CPI, as well as several euro-zone confidence data, due Thursday; and German retail sales, and euro-zone unemployment and CPI, due Friday.

BusinessDesk.co.nz

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