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Highlights
- The UK stock showed a downward trend during the passing week, with major benchmarks ending the red.
- All the national as well as some global developments on economic and market front keep impacting the UK stocks.
The UK stock market showed a downward trend during the passing week. The blue-chip index, FTSE 100 was down by 1.69%, while the mid-cap focused FTSE 250 index was down 0.28%, mainly due to corporate result announcements and key economic data. In the last week announced data, inflation in the UK jumped to a 10-year high at 4.2%, making a strong case for an interest rate hike by the central bank to ease some inflationary pressure.
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Let us take a look at some of the key economic and market events that might impact the UK stock markets this week:
Fresh Covid-19 outbreak
Many European countries are once again witnessing a rise in the Covid-19 cases. Moreover, Austria has already declared nationwide lockdown for 20 days starting from today to curb inflation. Austria’s lockdown measure will last till 13 December. However, the measures will be revisited after 10 days. In recent times, European countries have seen a rise in coronavirus cases and the government fears that the Eurozone might see another lockdown like situation ahead of the Christmas festival.
The UK has been witnessing over 40,000 cases on daily basis as per government data with Torridge and Mid Ulster witnessing the biggest jump in weekly cases. As per experts, the next few weeks are very crucial for the UK and European countries. Any fresh outbreak of coronavirus can derail the UK economy which is already facing a lower growth rate and high inflation.
Key economic data
IHS Markit/CIPS will release the preliminary estimate of service and manufacturing PMI for November 2021 on 23 November. Manufacturing PMI stood at 57.8, while service PMI was at 59.1 in October 2021. A reading above 50 is generally considered good for the economy. Investors and traders keep a close eye on the PMI survey as it gives an early indication about where the economy is moving ahead.
Central Bank Members Speaks
The Bank of England’s Monetary Policy Committee (MPC) members will speak at different events during the week and their views might give hints about the future interest rate hike and economic outlook. Any significant comment by MPC members would give direction to the UK stock market.
International Events
The largest economy in the world, the United States will release its third-quarter GDP data this week. As per forecast, the US economy is estimated to grow at 2.1%. Also, the US will release initial jobless claims and consumer sentiments data. As world markets are interlinked any significant changes in the US economy might have a cascading impact on the other markets as well.
In addition, Black Friday, which is a key holiday shopping period starts this week worldwide amid supply chain constraints and high inflation. Higher sales and consumer spending during the period will help the businesses recover from the Covid-19 pandemic.
