 Hello and welcome to CMC Markets on Friday the 7th of June and this quick look at the week ahead beginning the 10th of June and it's been a slightly better week for equity markets it's been a welcome respite actually if you look at the declines of recent weeks the decline in Brent crude prices and the general risk off appetite that we've seen over the course of May. So we've seen a bit of a rebound this week fairly decent one of that but bond markets have continued to look well bid yields are still quite a bit lower from where they were a few weeks ago and gold is still near its highest levels this year above 1,330 so as we look ahead to the week ahead we've got a whole host of important data coming out at a time when China tariffs have started to kick in on the 1st of June of $60 billion on US goods and we've got a whole host of Chinese economic data coming out in the week ahead we've also got the G20 finance ministers and central bankers meeting over this coming weekend as well as a whole host of UK data UK wages UK unemployment coming up as well as the Swiss National Bank rate decision but for this week the week just gone we've seen a decent rebound a large part of that I think is down to the fact that central bankers have become much more dovish in their outlook the ECB rates decision earlier this week was I think significant by virtue of the fact that Mr. Draghi tried to come across as dovish by saying that the ECB would do whatever it took and in the adverse circumstance with respect to the economy but by the same token they also upgraded their inflation and GDP forecasts while at the same time the Bundesbank sharply downgraded the German outlook for its economy so those two factors are slightly contradictory that being said we've seen a nice little rebound in the German DAX off the 200 day moving average but what we haven't done as yet is taken out this trend line resistance from the peaks that we saw at the beginning of May which currently comes in around about the 12,100 level so I'll be keeping an eye on that particular resistance level there it's also coincides with the 50 day moving average if we also look at the FTSE 100 we can see also that there is a similar resistance level also coming up just around about the 50 day moving average just above the 7,300 level so that comes in around about 7,330 7,340 there or there about so we are approaching a number of key resistance levels not only on the FTSE 100 but also on the German DAX if we look at the S&P 500 we've also seen a decent rebound there as well but once again the 50 day moving average is likely to act as a potential barrier to further gains and the value for that comes in around about 2865 2870 so I'll be keeping an eye on those key resistance levels as we look ahead to US non-farm payrolls which at the time of recording this video haven't as yet been released but what we're looking for is jobs growth of 175,000 now that's been revised slightly lower in light of the AADP report earlier this week that came in I had a shock miss of 27,000 well down from the 185,000 new jobs that were expected and that has raised concerns that the US economy might be slowing I'm not overly concerned about one month's disappointing ADP number you may recall in February we had a similarly disappointing headline non-farm payrolls number which came in at 33,000 when we were expecting a 200,000 number so I think as long as this afternoon's numbers of non-farm payrolls coming in anywhere near the baseline expectation of around about 170,000 jobs and as long as wages remain fairly robust around about 3.2 3.3 percent and the unemployment rate remains at 3.6 percent then I don't think we've really got too much to worry about despite the dovish shift in the Federal Reserve's monetary policy stance this week now currently bond markets are pricing in the prospect of two Fed rate cuts this week this week this year I think that is slightly slightly overdone I think there's a possibility we could get a snapback in bond yields and a little bit of a sell-off in bond prices I think the likelihood is we could get one rate cut this year and that's likely to come in December but at the moment bond markets are pricing in on almost 95 percent possibility of a rate cut in September at this point in time that's three months away I think the wheels would really have to fall off the wagon for the Fed to cut in September and as things stand at the moment that doesn't appear likely services data that we've seen this week has been largely better than expected in Europe the UK and the US yes it has been disappointing in China but nonetheless there's no sign manufacturing sector notwithstanding that the wheels are about to fall off even if you are concerned about trade now I talked a little bit about the G20 finance ministers and central banks meeting over the weekend they're set to meet in Fukuoka in Japan this weekend I think the main topic of discussion is obviously likely to center around trade and whether or not Steve Manuka in the Treasury Secretary will try and reopen a dialogue with his Chinese counterpart ahead of the end of the month G20 meeting which is due on the 28th and the 29th of June and there could also be some discussions about how to tax big multinational corporations like Google and Facebook which have been in the news this week due to Federal Trade Commission's investigation into some of their pricing practices we've also got Chinese trade numbers for May which are due out on the 13th followed by Chinese retail sales and industrial production numbers for May due out on the 14th now the most recent set of China trade data for April a little bit of a mixed bag we did see an improvement in the March numbers exports rebounded quite strongly this appeared to be a full storm because in April we saw exports decline 2.7% and I think the rebound that we saw in March was probably down to some front running of increases due to some front running of increases in tariffs as an arbiter of internal demand I think we really need to look at how the the trade numbers are skewed in the coming months by front running ahead of the rises in tariffs that we saw kick in at the beginning of June because on the 1st of June China put its own tariffs on $60 billion worth of US goods with respect to retail sales and industrial production for China manufacturing sector has continued to be an under performer it's likely that the main numbers will probably be pretty much the same in March we saw a strong rebound in industrial production to 8.5% but that was that appears to be a flash in the pan April fell back to 5.4% retail sales also slowed to the lowest levels in 16 years in April they were pretty dreadful and I think investors will be hoping that there are one off and we see a rebound in May if we don't and in the absence of dialing back in trade tensions then we could expect to see this rebound that we've seen this week run in to a little bit of selling pressure irrespective of what central banks are signaling with respect to monetary policy we've got the swiss national bank rate decision also this coming week and they're likely to signal that rate rates are likely to remain on hold for quite some time to come now there is some natural resistance in euro swiss around about one twelve thirty one twelve twenty we have seen some safe haven buying of swiss francs over the course of the past few weeks largely I think as a result of the sell-off in equity markets the rebound in equity markets could see some of that pressure come off but I can't see the euro swiss moving much above the one thirteen level which is also where we have the 200 day moving average so if we get continue to get a rebound in equity markets euro swiss could benefit from that if equity markets continue to push lower then obviously euro swiss could run could run into a little bit of selling pressure and similarly for gold which we've seen a nice little spike up but we haven't as yet taken out the thirteen forty five level which basically is this year's peak so keep an eye on gold prices if we break higher there then we could well see a further weakness in equity markets or or vice versa we've also got us retail sales for may do out on the 14th of june keep an eye on those numbers is the us consumers spending patterns still holding up personal personal income and personal spending have income has continued to come in ahead of spending spending has been a little bit subdued the only really decent number for retail sales this year was the 1.6 percent gain that we saw in march other than that the picture's been fairly subdued despite fairly decent payrolls growth and fairly decent wages growth on the sterling front it's been or looks like it's going to be another negative week for the pound against the euro and we've seen a little bit of a rebound against the dollar but that's largely on the fact on the back of the fact that the Fed has gone slightly more dovish rolling out the prospect of further rate rises this year no one's talking about that now and that's reflected in a little bit of weakness in the dollar brexit in stention in march didn't quite have the effect of boosting consumers spending that we expected it might largely as a result of the timing of easter and some decent weather unemployment rates though still continue to look um continues to still look fairly decent um you know multi year lows despite reports of job losses in retail and manufacturing in recent weeks inflation does appear to be starting to drift higher and i think that is a little bit of a worry but that's largely as a result of higher fuel prices and oil prices have come down in the past few weeks so that should edge off i think the wages numbers are likely to be the important numbers keep an eye on them expect them to come in at 3.3 percent if they start to show signs of weakness that could well be disappointing for the pound so key level on the pound 125 40 keep an eye on that on the downside 128 30 128 40 on the upside on the corporate front the big story i think of this week is what i'm going to focus on is tescos tescos latest q1 sales and revenues numbers which is due out on the 13th of june now last year was a good year for tescos we saw 34 jump in profits i think they'll do well to be able to match that kind of performance in the weeks and months ahead this week's q1 sales numbers are likely to be a reminder if anyone needed that the retail environment remains tough likely to remain a drag on profits over the next few months and this does appear to have been been borne out by the latest cantile world panel data which showed the uk's number one supermarket share dropped to 27.3 percent at the end of last month from 27.7 percent a year ago and once again this has been down to discountes ali and little eating into its market share and i think is this this increase or pressure on margin has prompted tescos to look at pulling back from a number of its non-core operations as it as it strives to keep a lid on its costs and obviously one of the decisions to do to to to do that was to when it pulled out of the mortgage market earlier this year and is now looking to offload its mortgage book it's just one example of tescos looking to basically pull back and focus on its core competencies so that's pretty much it for this week i know it's gone on a little bit but that's that's it for this week thank you very much for listening it's michael houston talking to you from cmc markets