Shaping the markets – this weekGeopolitical tensions usurp tapering fears; safe haven buying resumes
- While the UK market was closed for a public holiday on Monday 26 August, other markets were preoccupied with the escalating geopolitical tensions in Syria and concerns for a possible western military intervention. In the US, the biggest drop in orders for durable factory goods in almost a year, down 7.3% in July, took investors by surprise. Safe haven buying helped US Treasury prices rise, and yields to fall to below 2.8% for the first time in seven sessions. In other data, the release of the German Ifo business climate index brought a respite on Tuesday morning, as the index, which rates the current German business climate and sets out expectations for the next six months, rose to 107.5 in August from 106.2 in July.
- For the rest of the week, data of significance for the US includes consumer confidence indicators (Conference Board and the University of Michigan) for August — which are likely to have deteriorated slightly, and a second revision to Q2 gross domestic product (GDP) growth, expected to be revised up to 2.2% quarter-on-quarter annualised, from 1.7% originally.
- Numbers to watch in Asia include Q2 GDP releases for Philippines and India while Korea and Thailand report current account numbers for July. In Europe, following the strong PMI of last week other confidence indices (European Commission, INSEE) should show an overall improvement, while the flash consumer price inflation (CPI) measures for Germany and the euro area are expected to tick lower in August.