Weekly Roundup & Look Ahead: Fears surrounding German banks send volatility shooting higher

Synopsis of the week

• Deutsche Bank has hogged the headlines for all the wrong reasons, as markets squeeze the shares lower in both European and US trading.
• OPEC agree to cut output, but will not completely ratify or implement until its November meeting in Vienna. Having already seen April’s agreement fall apart and being reliant on Saudi Arabia and Iran maintaining cordial relations for over a month, analysts are unified in their scepticism that this can work.  
• Fear rather than optimism dominates trader’s thinking.  Driven by worries of the European banking sector, equity markets around the world sell off into Friday’s month and quarter end.
• Monday night’s Presidential debate shows Hillary Clinton has the upper hand in verbal sparring, but failed to create a more meaningful gulf between herself and Donald Trump in opinion polls.

The Week Ahead

Economic Data

Theresa May the UK Prime Minister confirmed that the UK would trigger article 50 by the end of the first quarter in 2017. The city has widely expected that to be the case, but this announcement effectively puts to bed any speculation that the UK might hold a second referendum. Although this still leaves more questions than answers as to the consequences of Brexit, the city will be glad that there’s at least a little more clarity on start of these changes.

The first week of the fourth quarter of 2016 might be a little quieter as China enjoys a week-long Bank Holiday. Europe’s major cities have in recent times been the biggest beneficiaries of the “Golden Week” as the rich have tended to jet off on week-long spending sprees. So we would expect to see several feel good stories about European retailers. Monday will also be a Bank Holiday in Germany and considering the issues surrounding Deutsche Bank (the country & EU’s biggest bank) this could be a trigger for more volatility.

Throughout the week a succession of Manufacturing, Construction and Services PMI data will be released around Europe and the US. This all leads nicely towards Friday where once again we’ll see US unemployment levels and Non-Farm payroll figures. These figures are still viewed as one of the biggest barometers on Fed interest rate policy decision making.

Corporate releases

Although a quiet week in regard to the number of companies reporting, there are still several heavyweights in amongst the list. First-up will be Ford posting its’ latest car sales figures.

The UK’s largest food retailer Tesco will be posting its first half figures on Wednesday, maintaining dominant market share will still be the focus however, the continuing fallout from the account scandal in 2015 is still tarnishing the company’s reputation with investors.

Thursday will see the latest sales data out of Costco, Easyjet and Gap with Yum brands posting third quarter earnings. The share price of Easyjet looks particularly precarious since last week. Should it fail to hold above £10 its shares may show the flying skills associated with Icarus rather than one of its current fleet of jets.