Steve Waddington
Key points highlighted by Steve Waddington, Portfolio Manager in the Multi Asset Group at Insight Investment, a global investment manager, on highlights from the European and US markets this week :
- The most important data this week are European flash November PMIs, which are released on Thursday, while US markets are shut for Thanksgiving. The FOMC minutes released on Wednesday are not likely to change expectations of a rate hike next month. Separately, Bank of England Governor Mark Carney said UK interest rates could rise “a couple of times over the next few years” if the UK economy evolves in line with expectations.
- While the UK budget normally occurs in spring, from this year the budget is being moved to autumn to allow tax changes to occur well before the start of the fiscal year (which ends on 5 April). The chancellor is under pressure from members of his party who supported Brexit to increase spending to support the economy during its exit from the European Union. The UK labour market showed signs of slowing on Wednesday, as the number of people in work fell for the first time in almost a year.
- Last week the House voted to pass its US tax reform bill, but the bottleneck is likely to be the Senate as Republicans only have 52 of the 100 seats. As the Senate Finance Committee voted to approve its revised package a full chamber vote is imminent. As Thanksgiving is on Thursday, the vote is most likely to occur next week. However, given the differences between the Senate and House’s tax bills, there is likely to be a significant period of reconciliation, which could delay the implementation of the bill until early 2018.