EU and US to unleash a barrage of market-moving events this week
What happened last week?
Last week was an eventful one. At Portfolio's Budapest Economic Forum conference, Minister of National Economy Márton Nagy presented the government's economic strategy plans for the coming years, as well as providing some detailed forecasts. Deputy Governor of the National Bank of Hungary (MNB) also gave a speech at the Portfolio event, in which Barnabás Virág gave a huge surprise preview of interest rate decisions in the coming months, suggesting that interest rates may not only remain unchanged in October (read about the other presentations and panel discussions of the conference here, here, here, here and here). In addition, the ECB also held a rate-setting meeting, and the decision turned out to be much tighter than expected.
Following Barnabás Virág's words, the forint has started to strengthen significantly, having recently gone above 400 against the euro a few weeks ago. It managed to strengthen temporarily below 400 in the following days, but eventually finished the week around 400 again. The ECB, which sent out a stern message, managed to reverse the euro's exchange rate against the dollar and the common European currency began to appreciate.
Last week saw some upturns in the markets, with the S&P500 US stock index ending the week in positive territory. The BUX index, on the other hand, did not perform well, with the MNB's statements on interest rates and the ECB's decision hurting the Hungarian stock market (the bigger falls occurred on these days). Emerging markets are also under pressure with the US presidential election coming up, as Trump's growing chances of winning the election are worsening the prospects for US trading partners (and the US economy). The German market managed to rise slightly last week.
What can we expect this week?
The main focus this week will be on European economic data.
The interest rate decision meeting of the MNB would be by far the most important event if we did not know the content of the decision in advance after Virág's messages last week. Below are the important events broken down by day, but there will also be important Fed, ECB and Bank of England speeches, and as we approach the US presidential election, markets may become increasingly hysterical at the sight of any news (such as a survey).
Monday will be a quiet day domestically, with no important market data releases expected. Abroad, the focus will be on German industrial producer inflation and the Chinese central bank's interest rate decision, which has already taken place by the time this article is published. The Chinese government, together with the central bank, is stimulating massively and international investors are now paying close attention.
The MNB's interest rate decision is due on Tuesday, when the Hungarian benchmark rate is expected to remain unchanged. Before that, the Central Statistical Office (KSH) will present Hungarian wage statistics for August. There has been a significant nominal wage increase in the country, we will see if the trend held in August (it probably did).
Wednesday is the commemoration day of the 1956 Revolution, a national holiday, which means that the stock exchange is closed in Hungary and there will be no important data releases, but trading abroad will continue as usual. The EU's consumer sentiment will be updated by the European Commission. It is a moderately important sentiment index, but if it falls sharply it could cause some alarm in the markets. In the evening, the Fed's beige book on the macroeconomic assessment will be released.
We do not expect any important data domestically on Thursday, but overall this will be the most important day: the European Purchasing Managers' Indices are very much in the spotlight as the weakness in the European economy has implications for interest rates.
Friday will also be a day to watch, with Hungarian employment data due out, but more importantly, S&P will publish its Hungarian credit rating decision: an unfavourable verdict could have a major impact on markets. We will only know after the weekly market close. Elsewhere, the German Ifo index and the US Michigan index will both be important, with inflation expectations being of particular interest in the latter.
Cover photo (for illustration purposes only): Getty Images
