Week Ahead

The earnings season enters its busiest phase in the coming week, with Apple, Facebook, Microsoft, Alphabet and Amazon reporting quarterly results; while the US Federal Reserve will be deciding on monetary policy. On the economic data front, the US is releasing the first estimate of Q2 GDP, alongside durable goods orders, and personal income and outlays.

Other GDP updates to follow include those from the Eurozone, Sweden, Mexico, South Korea, Taiwan and Hong Kong. Elsewhere, the bloc’s business survey and inflation will be keenly watched, as well as Japan retail sales and industrial production, China NBS PMI survey, and Australia Q2 inflation data.

The Federal Reserve is seen holding the target range for the federal funds rate steady at 0-0.25 percent at the end of a two-day meeting on Wednesday, and will probably debate when and how to kick off a bond taper despite the spike in COVID-19 cases. In June, the Fed left interest rates at record-low levels, but signaled two rate hikes by the end of 2023, surprising market expectations. Officials also launched the discussion over when to start cutting monthly purchases of $120 billion of Treasuries and mortgage-backed securities.

On the economic data front, the advance estimate of GDP will probably show the US economic growth gathered pace during the second quarter of the year, boosted by an ongoing rapid recovery in services activity due to the easing of COVID-19 containment measures. The world’s largest economy is seen growing by an annualized 8.2 percent during the April to June period, following a 6.4 percent expansion seen in the previous three-month period. Other notable publications include: personal income and outlays; PCE price index; durable goods orders; second-quarter employment cost index; CB consumer confidence; new and pending home sales; Dallas Fed Manufacturing Index; Case-Shiller home prices; Chicago PMI; the advance estimates of goods trade balance and wholesale inventories; and the final reading of Michigan consumer sentiment.

Traders also prepare for the busiest week of earnings season, with focus turning to reports from big firms including Apple, Alphabet, Amazon, Microsoft, Facebook, Tesla, Procter & Gamble, Pfizer, Gilead Sciences, Merck & Co, Takeda Pharmaceutical, CME Group, 3M, Caterpillar, Qualcomm, Spotify, PayPal, Mastercard, Visa, McDonald’s, Starbucks, General Electric, Ford Motor, Boeing, Exxon Mobil and Chevron.

Elsewhere in America, important data to follow include Canada monthly GDP, inflation rate and the final reading of producer prices; Mexico second-quarter GDP, trade balance and unemployment rate; and Brazil jobless rate and current account. Policymakers in Colombia will be deciding on interest rates.

Meanwhile, it will be a soft week in the UK’s economic calendar, with only the Bank of England’s monetary indicators, CBI distributive trades, Nationwide Housing prices and car production to be released. Elsewhere in Europe, the Eurozone’s largest economies, including Germany, France, Italy and Spain, will be publishing their preliminary estimates of second-quarter GDP, inflation rates and jobless data. The bloc’s economy is seen rebounding 1.5 percent after suffering a setback in the previous three-month period, as coronavirus-induced restrictions were gradually lifted. Other key data to follow includes: Germany and Italy business and consumer morale; France consumer sentiment; Spain retail sales; Sweden second-quarter GDP; Turkey manufacturing confidence and foreign trade; and Switzerland KOF leading indicators.

In Asia-Pacific, Japan will be publishing industrial production, retail sales, consumer confidence, jobless rate, housing starts and the Jibun Bank PMI survey. Factory output likely rebounded in June from May’s sharp contraction, while retail trade growth was expected to slow amid a resurgence in COVID-19 infections. In China, data to watch for include the NBS PMI survey and industrial profits; while in South Korea, second-quarter GDP, business and consumer morale, industrial output and retail sales will be in the spotlight.

Elsewhere, investors will turn their attention to Australia’s second-quarter consumer price inflation, producer and foreign trade prices; New Zealand’s trade balance and building permits; Taiwan and Hong Kong second-quarter GDP figures; and Singapore jobless rate.

Categories: Markten