Weekly Preview: August Week 2

Last week,

geopolitical risks had a negative impact on the E.U. Stock index in E.U. declined about 5%~9% in Southern Europe while France, Germany and U.K. defended the impact with 1.3%~2% drop. S&P 500 also tended to drop until the last day of the week, where it increased 1.15%. S&P 500 dropped 3.9% from July 24 to August 7.

With higher geopolitical risks, investors tend to look for safer asset like treasury. Oil price did not highly affected by the risk but there is still a possibility that it will affect the supply. As the days pass, geopolitical risks tend to have a temporarily effect.

This week,

• On Monday, there will be

1. Japanese M2 money stock
2. Japanese household confidence

• On Tuesday, there will be

1. Japanese industrial price index
2. French current account index
3. Italian CPI
4. German and E.U. Economic Sentiment Index

• On Wednesday, there will be

1. Korean imports and exports
2. Japanese GDP (prediction)
3. Chinese industrial outputs
4. French, German and Spanish CPI
5. U.K. unemployment rate and jobless claim along with chief of BOE speech
6. E.U. industrial outputs
7. U.S. retail sales and core retail sales with industrial inventory

• On Thursday, there will be

1. Korean unemployment rate with interest rate
2. U.K. house price
3. E.U., French and German GDP (prediction)
4. E.U. CPI and core CPI
5. Indonesian interest rate decision
6. U.S. import price index and jobless claim

• On Friday, there will be
1. No market in Korea, India and Italy (holiday)
2. U.K. GDP (prediction) with index of services
3. Hong Kong, Malaysia GDP
4. U.S. producer price index (and core), industrial outputs and Michigan sentiment index

Economic indicators in E.U. will tell how market goes this week. While Draghi said that ECB may put more stimulus on the economy, it is likely implemented if this week's indicators got worse. Unemployment rate and CPI will greatly affect E.U. and Fed's monetary policy. In case of Fed, it might decrease the interest rate early, but it depends on how labor market goes.