Week Ahead

Next week, investors’ focus will turn to corporate results as the second-quarter earnings season in the US kicks off. On the macro front, US inflation rate, China and UK GDP growth figures, India retail and wholesale prices and monetary policy decisions in Canada and New Zealand will offer traders fresh updates on the strength of the global economic recovery.

In the US, the start of the earnings season and inflation rate release will take centre stage next week. PepsiCo kicks off major reports on Tuesday, followed by Delta Air Lines on Wednesday, JPMorgan Chase and Morgan Stanley on Thursday, and Wells Fargo, Citigroup and PNC Financial on Friday. Second-quarter earnings for the S&P 500 are expected to grow by 5.7%, according to Refinitiv. On the data front, annual inflation rate is seen rising to 8.8% which would be the highest reading since December of 1981, pushed once again by energy cost. Core inflation however, is expected to slow for a third month to 5.8% from 6%. Also, retail sales are seen rebounding, manufacturing production likely stalled in June while the Michigan consumer sentiment is expected to sink to a new record low this month. Other important data include the NFIB Business Optimism Index, consumer inflation expectations, producer prices, export and import prices, business inventories and the NY Empire State Manufacturing Index.

Elsewhere in America, the Bank of Canada is expected to deliver a 75bps rate hike, its fourth consecutive rise, as inflation rate is currently at levels not seen since 1983. Also, it will be interesting to follow Mexico industrial production, Brazil retail sales, Argentina inflation rate and Chile interest rate decision.

In the United Kingdom, monthly GDP figures from the ONS are expected to show the economy stalled in May, with industrial production set to be unchanged from the previous month and manufacturing output rebounding slightly after three consecutive months of falls. Investors will also keep an eye on the foreign trade balance, construction output and the BRC retail sales monitor.

Elsewhere in Europe, confidence in the German economy is set to decline again in July with risks probably steaming from elevated energy costs due to its reliance on Russian natural gas supplies. Other data include Eurozone balance of trade and industrial production; Germany final inflation figures and wholesale prices; Italy retail sales and foreign trade; and Turkey industrial activity and unemployment rate.

It will be a busy week in China, with the country set to report a batch of fresh economic data. The most important figure will be the GDP growth for the second quarter due Friday, which will reveal how severely growth was derailed by the long, stringent lockdowns. Retail sales, industrial production, fixed asset investment, and new yuan loans are also due during the week.

In Australia, the spotlight will be on the labor market statistics for June, which will be key in assessing the scope of the Reserve Bank of Australia’s monetary policy outlook. The NAB Business Confidence and Westpac Consumer Confidence are also due. In neighboring New Zealand, the central bank meets to raise its cash rate by 50bps, the sixth straight rate hike.

Investors will also keep a close eye on Japan machinery orders and Reuters Tankan Index; India retail and wholesale inflation and industrial production; Singapore’s second-quarter GDP growth; and South Korea interest rate decision.

Categories: Markten