World Week Ahead: Eyes on Apple, impact of Irma

Monday 11th September 2017

Investors will assess the impact of Hurricane Irma and eye the latest data on US inflation and retail sales while continuing to monitor nuclear tensions between North Korea and the US.

Also on the radar are Apple, which is set to unveil its latest products including a new iPhone model on Tuesday, and the Bank of England’s latest policy announcement, scheduled for Thursday.

Last Friday, New York Federal Reserve President William Dudley said that major storms tended to lift economic activity over the longer term, though Hurricanes Harvey and Irma might impact the timing of the next US interest rate hike. He signalled the central bank would likely proceed with the unwinding of its balance sheet.

“I don't think they'll have any meaningful effect on the balance sheet normalisation decision," Dudley told CNBC.

The Federal Open Market Committee begins its next two-day meeting on September 19.

Last week, shortened to four days by the Labour Day holiday, the Standard & Poor’s 500 Index dropped 0.6 percent. The US dollar and oil prices slid on Friday, while US Treasuries gained.

“September and October are historically trying months for equities and add on to that geopolitical risk, it is somewhat prudent to be taking a little bit off the table here,” Anthony Conroy, president at Abel Noser in New York, told Reuters.

Wall Street’s fear gauge—the CBOE Volatility Index or the VIX—rose 4.9 percent to 12.12 on Friday.

“It’s a confluence of concerns that have been hovering over the market, everything from North Korea ... and obviously the hurricane and the damage that will ensue,” Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey, told Reuters.

In a sign of intensifying competition in the US grocery industry, shares of Kroger sank after the supermarket chain ended its practice of giving longer-term earnings guidance because of the “dynamic operating environment.”

"As our business continues to improve, we remain committed to delivering on our guidance in 2017 and believe we have the ability to grow identical supermarket sales and market share in 2018," CEO Rod McMullen said in a statement.

“In this dynamic operating environment, we will continue to provide annual guidance as we have done for many years but will no longer provide longer-term guidance,” McMullen said.

Shares of Kroger closed 7.5 percent weaker on Friday.

US economic reports scheduled for release this week include the NFIB small business optimism index, and JOLTS, due Tuesday; producer price index, due Wednesday; consumer price index, and weekly jobless claims, due Thursday; retail sales, Empire State manufacturing survey, industrial production, business inventories, and consumer sentiment, due Friday.

In Europe, the Stoxx 600 Index closed with a gain of 0.1 percent on Friday, while the euro rose 0.1 percent to US$1.2032, the strongest in almost three years, according to Bloomberg.

Bank of England policy makers gather on Thursday and are expected to keep their key interest rate steady at a record low 0.25 percent. Investors, however, will eye a potential change in tone to a more hawkish positioning.

“While there is zero chance of any policy action at this meeting, the thrust of the minutes and the vote could yet spring some surprises,” Alan Clarke, an economist at Scotiabank, told Bloomberg. Recent news “has been mildly hawk-friendly,” he said.

But first the latest regional economic data include reports on the UK’s consumer price index, and producer price index, due today; Germany’s CPI, eurozone industrial production as well as employment, due Tuesday; and eurozone trade balance, due Friday.

(BusinessDesk)

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