UK GDP due Thursday: economists expect 0.7% growth in Q3
In short
- Two UK markers lead the week in Europe: Q3 GDP on Thursday at 07:00 GMT (2:00 a.m. New York) and speeches from Bailey, Lane and Pill.
- Economists expect growth of 0.7% after 0.5% in the second quarter; the ECB is at 2.50% and does not meet until December.
- Friday’s closes: DAX −1.9%, Euro Stoxx 50 −1.0%, FTSE 100 −1.0%.
Europe starts the week without a major central bank decision, but with a few dates that can move the pound, the euro and shares, and with them the dollar value of European holdings. The key one comes on Thursday at 07:00 GMT: the first estimate of UK GDP for July to September.
What happened
The UK economy grew 0.5% in the second quarter. The consensus for the third is 0.7%, according to MUFG Research, in line with the Bank of England’s own estimate. The Bank raised Bank Rate to 4.00% on 5 November, with an 8–1 vote. Governor Andrew Bailey speaks on Monday at 17:25 GMT, and chief economist Huw Pill on Tuesday at 18:30 GMT.
The euro zone has a quieter week. The ECB held rates on 29 October, with the deposit rate at 2.50%, and does not meet again until December. ECB board member Philip Lane speaks on Tuesday at 16:45 GMT. On Wednesday Germany publishes final October inflation (the first estimate was 2.8%), and on Friday comes the second estimate of euro-zone Q3 GDP. Euro-zone inflation was 3.8% in September.
The backdrop is calmer than a week ago: Brent is below $100 a barrel and TTF gas below €90 a megawatt-hour. European shares still fell on Friday. HawkValue data shows the FTSE 100 at 10,674 (−1.0%), the DAX at 25,820 (−1.9%) and the Euro Stoxx 50 at 6,170 (−1.0%).
What it means for you
For a US holder of European shares or funds, the exchange rate matters as much as the share price. At 06:45 Sofia time the site shows $1.1165 per euro, so €1,000 of German shares is worth about $1,116.50.
The maths: a 1% move in the euro changes that holding by about $11.17 per €1,000, whatever the DAX does. If the euro slipped 1% to $1.1053, the same position would be worth $1,105.30; a 1% rise would make it $1,127.70.
See US and global indexes on the stock market page, and read our report on the Bank of England’s 5 November decision.
Bottom line
Europe has no major central bank decision this week, but UK GDP on Thursday and the speeches from Bailey, Lane and Pill can shift rate expectations. The consensus for GDP is 0.7% after 0.5% in the previous quarter.
Sources: MUFG Research · Skyrexx
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