Reports from the US that the Senate and House have diverging plans for their respective tax reform bills weighed on markets with the Senate's version delaying corporate tax cuts until 2019, as opposed to next year. These differences will need to be reconciled for the administration to get legislation passed.
As earnings seasons draws to a close, of the 88% of the S&P 500 that have reported, 72% have seen positive surprises in relation to earnings-per-share, with tech, materials and healthcare leading the way. The picture was less positive in Europe where lacklustre earnings weighed on markets, with equities having their worst week in three months.
However, the picture was brighter on the economic front with manufacturing and services PMI data beginning the fourth quarter on a high note. The European Commission has subsequently upgraded is 2017 GDP growth rate to 2.2% from 1.7%.
The global index in euro terms returned -0.6% last week, as Europe suffered its worst week since August, although remains up over 10% in 2017.
Oil continued its recent positive run, as political uncertainty in Saudi Arabia pushed prices to just short of $57/barrel.
The 10-year US bond yield closed the week at 2.40% with the German equivalent closing at 0.41%. The EUR/USD rate closed at 1.17, and has stabilised somewhat in recent weeks.
The week ahead
Tuesday 14th November :
The 2nd estimate of Q3 eurozone GDP goes to print, with the consensus expecting a growth rate of 0.6% (quarter-on-quarter).
Wednesday 15th November :
US CPI data for October is released and will be watched closely by the market as the Fed eyes a rate rise next month.
Thursday 16th November :
Eurozone inflation for October will also be made available this week, the first figures since the ECB announced the recent reduction in the QE programme.