China and oil prices are key in the short term

Market movers ahead

In the US, there is a heavy agenda, with the Jackson Hole Symposium running over this weekend and major economic releases during the week. In terms of US data, we estimate that job growth slowed to a still-solid 205,000 in August from a growth rate of 235,000 on average over the past three months. We expect the manufacturing ISM to decline from 52.7 to 52.2, while the non-manufacturing ISM should fall back to 57.8 in August, from an elevated 60.3 in July.
In the euro area, the main event next week is the ECB meeting. We expect Mario Draghi to sound dovish, emphasising the open-endedness of the QE programme and that the ECB is ready to use all available instruments if needed. We do not expect the ECB to deliver further easing in September.
In the UK, we expect PMI figures for August to show a small decline in PMI services to 56.8, from 57.4 in July, while we expect PMI manufacturing to increase marginally to 52.2 in August, from 51.9 in July.
The Chinese stock market has stabilised in recent days. Next week, the main hurdle for China’s stock market is the release of the official (NBS) manufacturing PMI. We expect manufacturing PMI to decline to 49.8 in August, from 50.1 in July.

Global macro and market themes

A gradual recovery in China and oil prices should stabilise the emerging market turmoil.
US and euro growth data still robust.
Rising pressure for more QE from the ECB points to lower yields short term.

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