In the coming holiday-shortened week stock markets are likely to remain focused on the twin themes of brightening prospects for a coronavirus vaccine against the rapid spread of the pandemic across the United States. Economic data, including reports on personal spending and consumer confidence will show whether the resurgent virus is prompting concerns over the economic outlook ahead of Black Friday, the kick-off event for the holiday shopping season. PMI data from the euro zone will likely point to a significant decrease in business activity as the new lockdown measures will be fully reflected in the figures. Meanwhile, Britain and the European Union appear to be on the verge of striking a post-Brexit trade deal. Here is what you need to know to start your week.
Vaccine optimism vs. virus reality
Stock market investors are weighing the risks from the fast spreading virus and a potentially robust economic recovery once a vaccine is widely deployed.
But the pandemic remains an immediate threat with the U.S. recording its 12th million COVID-19 case on Saturday, capping a series of days with record-breaking infections. Meanwhile, millions of Americans are expected to travel for the upcoming Thanksgiving holiday, ignoring warnings from health officials about furthering the spread of the virus.
U.S. economic data
The U.S. is due to release data on consumer confidence on Tuesday. Wednesday will be a packed day on the economic calendar with data on personal spending expected to point to a slowdown in October, while figures on third quarter GDP are expected to be unrevised.
Other reports include figures on initial jobless claims, which will be closely watched after an unexpected increase last week signaled that the recovery in the labor market may have stalled. There will also be data on the trade balance, durable goods orders, new home sales and consumer sentiment ahead of Thursday’s Thanksgiving holiday.
In a normal year, U.S. shoppers would be gearing up for "Black Friday," the traditional start of the holiday shopping season. But not this year. While growing coronavirus cases make the familiar scenes of consumers crowding into stores to snap up bargains unlikely, online orders are expected to surge.
Oxford Economics expects holiday sales to rise only 0.6% from a year ago due to a confluence of coronavirus, suffering incomes and a weak job market. Macy's (NYSE:M) expects a tough time with a possible 20% sales decline over the fall.
Euro zone PMI pessimism
Preliminary readings of November business activity from the euro zone on Monday are expected to be dismal amid the resurgent coronavirus and the second round of lockdown measures put in place to contain it.
While last month showed a small tick down for most indicators, these readings are expected to show a significant decrease. This will be largely due to the service sector, which is where all restrictive measures have been introduced so far, but there is likely to also be some impact in the manufacturing sector.
Britain appears to be on the verge of reaching a post-Brexit trade deal with the European Union that would regulate their relationship after the transition period ends on Jan. 1, 2021 -- just six weeks away.
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