In the markets: What to watch this week

Could this week’s data, including GDP growth numbers, current account data and consumer confidence, provide relief after stocks sagged and the rand weakened? 

All three major ratings agencies mentioned the issue of low growth in their reports over the past week, so tomorrow’s annual figure up to the end of the third quarter this year is very important.

Forecasts for GDP aim a little bit lower than the second-quarter reading of 0.6% and beat market expectations of 0.5%.

However, the first quarter’s growth dipped into negative territory for the first time since after the 2008/09 financial crisis. 

A reading of 0.3% growth is expected.

Gold, mining and manufacturing production numbers are due on Thursday and analysts are hoping for some good numbers from gold and mining to confirm the up cycle of the commodities sector after prices ramped up strongly this year. 

Mining production turned positive in August for the first time in a year and September data also showed strength. 

The combination of a weak rand around the 14.00 level to the US dollar and better mining production can hopefully help the current account numbers to decrease the deficit, which has been around since 2003.

On Friday, the Consumer Confidence report will be released. The report has shown decreasing confidence lately and has been dragged lower by households’ concern about the weak economic outlook. With inflation likely to accelerate, combined with a sustained weak rand, the purchasing power of most households will weigh on consumer spending. 

Elsewhere in the world, the European Central Bank (ECB) will have an important interest rate decision to make on Thursday as the results of the Italian referendum are in and there is a likelihood that Mario Draghi, president of the ECB, will extend the monthly asset purchase programme by six months. 

More important economic announcements this week:

Monday

• South Africa Standard Bank PMI
• Great Britain Services PMI
• US Balance of Trade and ISM Non-Manufacturing PMI

Tuesday

• Euro Area GDP Growth Rate

Wednesday

• South Africa Foreign Exchange Reserves
• Great Britain Manufacturing Production
• Crude Oil Inventories

Thursday

• China Trade Balance
• US Unemployment Change

Friday

• China Inflation Rate
• Germany Balance of Trade
• Great Britain Balance of Trade
• US Prelim UoM Consumer Sentiment

Giacomo Bonavera is head of foreign exchange trading at Capilis Asset Managers. Click here to visit the firm’s website.