Where now for the Eurozone & equities ?

With a bail out plan seemingly imminent for Ireland, where does focus turn when the dust settles and headline eurozone news subsides ? Well jitters in equity prices are likely to continue while Portugal’s woes are in the frame, and will certainly continue if one of the larger eurozone countries also comes under the spotlight. But when the bad news subsides, as it did in the summer, equity markets may well trade higher again…sounds like a time for trading the news..

A market trilogy awaits..

..with economic stimulae announced in the US, interest rate decisions from the UK & EMU; and US unemployment data.
First up is The Fed’s conclusion today on it’s 2 day meeting with an expected announcement of further purchases of treasuries, possibly amount to USD500 billion over a six month period, helping to keep borrowing costs lower in the hope of encouraging spending.
Thursday’s highlight is the brace of interest rate decisions from the Bank of England and the ECB. Any increase here or in Europe would obviously be a shock, despite rising interest rates emanating out of Asia recently. Initial Jobless Claims in the US follow in the afternoon, but focus is likely to be overshadowed by ‘Non-Farm Friday’
Friday starts with UK house price data, which is expected to show a fall in MoM house prices; but the main stage is held for the finale of the week, with non-farm payroll data out of the US, which is expected to show an increase of 61K versus previous drop of 95K.

This a lot of data for any 3 day period, and although many market participants will want to wait until the end of the week (or beginning of next) to make final trading decisions, it is more than likely that , from such a plethora of important data, one number will be out of line with expectations.

Stimulus from the US is definitely on the cards, and reflected in the market price. A market move would no doubt precipitate from insufficient stimulus, which would most likely drive equity prices lower; however assuming numbers are in line, market dynamics suggest that equities will trade higher from here, most likely joined by gains in commodities and bonds, as the US dollar weakens further.
The equity markets have been relatively quiet of late, with choppy conditions in the FX market; but once this week is over, hopefully clearer conditions prevail, allowing investors and traders to find direction in the markets.