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World Week Ahead Data reality check

Monday 23rd September 2013

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While the Fed's decision not to begin its taper captured most of the headlines last week, it was the US central bank's dimming view of economic growth that investors will be focused on this week.

In the coming days, data from July, August and September will put Fed Chairman Ben Bernanke's caution to the test.

On Tuesday, there's the S&P/Case-Shiller index for home prices in July and consumer confidence for September. On Wednesday, durable goods' orders for August and new home sales for last month too. On Thursday, it's time for second-quarter GDP and the weekly initial jobless claims. And on the final day of the week is personal income and the University of Michigan's confidence index.

"The underlying data is not as robust as what many thought and may turn weaker despite five years of easy money, and stocks are dependent on this monetary stimulus," Tim Hartzell, who helps manage about US$425 million as chief investment officer at Sequent Asset Management, told Bloomberg.

Ahead of the weekend, the Dow Jones Industrial Average dropped 1.19 percent to 15,451.09, the Standard & Poor's 500 Index shed 0.72 percent to 1,709.92 and the Nasdaq Composite Index fell 0.39 percent to 3,774.728.

Part of the reason for Friday's slump was continuing confusion over the message being sent by the Fed and its top policymakers.

In an interview with Bloomberg TV on Friday, James Bullard, president of the St Louis Fed, said the door is open for the taper to begin next month, depending on the data.

Also on Friday, Esther George, president of the Kansas City Fed, lashed out at her peers to say the decision not to taper this month has put the central bank's credibility at risk.

For the week, Wall Street was ahead as the Dow added 0.49 percent, the S&P 500 rose 1.3 percent, while the Nasdaq increased 1.41 percent.

Other key events for investors at the start of the week include the outcome of elections in Germany where Angela Merkel is seeking to secure a third term. Television projections showed Merkel won an overwhelming endorsement as her Free Democratic ally plunged out of parliament, Bloomberg News reported.

Merkel, who enjoys strong personal support, has been steadfast in her view that Germany must continue to be the key financial backstop for bailing out Europe's weaker economies.

"We have to continue on this course," Merkel said ahead of the vote. "Stabilisation in Europe is in the fundamental interests of Germans and secures German jobs."

The Stoxx Europe 600 Index climbed 0.9 percent to 314.2 last week, bringing its gain this month to 5.7 percent. The UK's FTSE 100 eked out a 0.2 percent rise, while France's CAC 40 climbed 2.2 percent in the past five days. Germany's DAX rose 2 percent last week.

Economic data on tap include PMI reports on euro-zone manufacturing and services, due Monday, Germany IFO reports, due Tuesday, and euro-zone economic -, industrial -, consumer -, and services confidence reports as well as German CPI, all due Friday.

Investors also will be waiting to hear how Apple's latest iPhones fared and expectations are high. A number of analysts expect the company to have sold a record number of its new phones this past weekend.

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