Week Ahead

Trouble in equity markets may not be over yet with investors looking for further clues on the course of Fed monetary policy and monitoring earnings result from big retailers. Retail sales, housing data and speeches by several Fed officials will take center stage in the US. Elsewhere, the inflation rates for UK, Canada, and Japan will be closely watched.

In the US, traders will keep a close eye on speeches from several Fed officials, including an appearance from Fed Chair Powell at a Wall Street Journal conference. Also, retail sales are expected to show consumer spending picked up in April while fresh figures for industrial production, the NY Empire State Manufacturing Index and the Philadelphia Fed Manufacturing Index will probably point to a slowdown in the industrial sector. Also, data for housing starts, building permits, existing home sales and the NAHB Housing Market Index will likely show the housing market is cooling. The earnings season will continue with major retailers including Walmart and Home Depot due to report alongside Target, Cisco Systems, Lowe’s and Deere.

Elsewhere in America, it will be interesting to follow Canada consumer and producer inflation and GDP growth figures for Colombia, Chile and Peru.

It will be a busy week in the UK, with several indicators providing an update on the British economic performance. Consumer inflation probably surged to 9.1% last month which would be the biggest rate on record since at least 1991. The unemployment rate is seen steady at 3-year lows of 3.8% while wage growth probably remained elevated, in another sign consumers’ living standard is squeezing. Retail sales, labour productivity and the Gfk consumer confidence are also due. Meanwhile, traders will follow the BoE Monetary Policy Report hearing in front of the Treasury Committee on Monday, with Governor Bailey in attendance.

Elsewhere in Europe, Russia is expected to publish figures for Q1 GDP which will provide an initial understanding of the impact of the war against Ukraine and sanctions imposed. Traders will also keep a close eye on the European Commission’s fresh Spring Forecasts while ECB’s meeting minutes and a speech from President Christine Lagarde in Darmstadt, Germany, could provide further clues on the central bank’s plans to fight inflation. Euro Area second estimates for GDP growth, final CPI figures, consumer confidence and trade data; Germany wholesale and producer prices; France unemployment rate for Q1; and Italy trade balance will also be in the spotlight.

In Japan, GDP, trade, and inflation data are due. The Japanese economy is seen contracting 0.4% in the first three months of 2022, after growing 1.1% in the previous quarter, likely weighed down by the impact of public health restrictions to curb the Omicron wave on private spending and exports.

In China, the People’s Bank of China will meet two times during the week, where both the medium-term lending facility and the key loan prime rates will most likely be left unchanged, as the central bank balances between a weak yuan and a slowing economy. The country also publishes April industrial production and retails sales data.

In Australia, the jobless rate likely declined to a fresh record low of 3.9% in April. Additionally, the nation holds federal elections, where Australia’s Labor Party could take a majority, according to the most recent opinion polls. Elsewhere, Thailand GDP figures and the interest rate decision in the Philippines will also be under the spotlight.