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Jarman: Optimism ahead of upcoming 'huge week'
Markets have been somewhat indifferent this week, we've seen Europe well bid as the S&P has been range bound set to close slightly lower on the week. The financial sector, namely banks and Insurers have struggled as both RBS's and HSBC's US units failed the highly anticipated stress tests being conducted in the US, furthermore the FCA on Friday announced they would be looking into insurance policies sold from the 70's - present. This has seen stocks like Aviva and Legal & General come under selling pressure which has further hindered the positive move seen in UK equities this week.
From a macro perspective Europe continues to move higher as the European Economic Sentiment Indicator posted above consensus readings of 102.4 vs Exp. 101.9. Europe over the US seems to be a theme that is continuing to gain momentum and has worked well in terms of stock market performance in Q1. I expect this to be an ongoing theme in Q2.
Next week is a huge week for sentiment as the US releases key tier-1 readings including both ISM Non Manufacturing and Manufacturing data, along with Non-Farm Payrolls. We'll need to see readings of 150,000+ jobs added along with 53 and above for ISM Manufacturing data to ensue the US growth target of 3 percent can be achieved. Numbers beneath this and we can expect a poor start to Q2.
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