Spreadex Market Analysis: UK Economy Improving But Consumer Demand Low

AM Analysis – “Investors awaiting a US economic report results in slow start to week” – Lee Mumford
 
European stock futures are indicating a lacklustre start to the week as investors await a US economic report that may show a drop in manufacturing. Asian shares traded within a steady range overnight after Chinese factory activity maintained steady growth in November.
 
According to a survey released on Sunday by a retail trade group, the number of shoppers hitting stores over the four-day Thanksgiving weekend rose but consumers where reluctant to open their wallets. The early spending gauge indicated a 3% drop in spending from a year ago.
 
Crude advanced for a second day following data from China which showed the second-biggest oil consumer is sustaining its economic growth. The Australian and New Zealand dollar traded higher following the reading as investors took to commodity currencies. The British pound soared on expectations of early policy tightening by the Bank of England.
 
PM Analysis – “Consumer demand remains fragile despite improving British economy” – Max Cohen
The FTSE 100 has been led lower throughout this morning’s session amid light volumes with heavyweight Tesco, (TSCO), amongst other retailers, weighing on the index. Despite the British economy improving further today, with job growth pushing UK manufacturing to a near three-year high in November, consumer demand remains fragile forcing retailers into stiff price competition.
 
There’s not too much in the current economic picture to suggest that the bull market many investors are currently enjoying is about to run out of steam. Last week the S&P 500 climbed 0.1 percent, ending 15 percent above the record for this year. Analysts expect profitability to improve with margins possibly climbing a further 10.5 percent in 2014 and 11 percent in 2015.
 
As long as unemployment remains above target levels, Federal Reserve policymakers will continue to be cautious with the Fed declaring after its October meeting that it will press on with its $85 billion in monthly asset purchases and continue to hold short-term rates near zero at least as long as unemployment is above 6.5 percent and forecast inflation is below 2.5 percent. Economists expect tapering to begin to one degree or another in March.
 
U.S stock index futures are little changed as investors take a moment to pause after the S&P 500 closed higher for the third consecutive month. Investors will wait until Ben Bernanke has spoken before reassessing positions with clues on future monetary policy likely.
 
[The original articles by Spreadex can be found here.]
 
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