Week Ahead – July 24th

It will be a very busy week in the US, with the spotlight on the Fed’s interest rate decision, the advance estimate of Q2 GDP growth, and earnings results for several big corporations. Other important releases to watch out for include personal income and spending, the PCE price index, durable goods orders, and S&P Global PMI readings. Additionally, investors will closely follow the interest rate decisions from the European Central Bank (ECB) and the Bank of Japan (BoJ), as well as inflation rates for Germany, France, Spain, and Australia. Furthermore, Q2 GDP growth rates for South Korea, France, and Spain will be of significant interest. Finally, there will be the release of flash PMI readings for Australia, Japan, France, Germany, the UK, and the Euro Area, along with the Ifo business climate report for Germany.

In the US, Fed policymakers are expected to deliver a 25 bps rate hike on Wednesday, which many investors believe will be the final one of the current tightening cycle. This is due to the sharp cooling of inflationary pressures and signs of loosening in the labor market. On the economic data front, the US GDP is expected to have grown by 1.6% in Q2, marking the weakest pace of expansion since the recession recorded in the first half of 2022. Other economic releases to follow include June’s personal outlays and income, PCE price index, durable goods orders, flash S&P Global PMI survey, Case-Shiller home prices, second-quarter employment cost index, new and pending home sales, and consumer confidence updates from both the Conference Board and the University of Michigan. The advance estimates of goods trade balance and wholesale inventories will also be in the spotlight. Finally, investors will closely follow earnings calendar that is packed with results from major tech companies such as Alphabet, Microsoft, Meta, and Amazon and corporations including 3M, General Motors, Spotify Technology, Verizon Communications, Snap, Visa, AT&T, Automatic Data Processing, Boeing, CME Group, Coca-Cola, QuantumScape, Mastercard, McDonald’s, Ford Motor, Intel, Chevron, Exxon Mobil, and Procter & Gamble. Elsewhere in America, investors will keenly watch Canada’s monthly GDP data, as well as Mexico’s trade balance and unemployment rate.

In Europe, the ECB is anticipated to hike the main intrest rate by 25 basis points rate to 4.25%. Also, market participants will closely monitor any indications regarding future rate adjustments, especially in light of recent dovish remarks from ECB officials and cooling inflation, which have led to speculations that this might be the last rate hike in the current cycle. Additionally, flash PMI data is expected to show a downturn in the Eurozone’s economy during July. In Germany, preliminary CPI data for July is expected to show a decrease in inflation after the previous month’s acceleration. Moreover, the Ifo Business Climate indicator likely declined for the third consecutive month in July while the Gfk consumer sentiment probably showed improvement. In France and Spain, flash GDP data is scheduled, with both countries expected to show economic growth, but at a slower rate than in the previous three months. Investors will also be keeping a close eye on Italy’s business survey results and Switzerland’s KOF Leading indicators. In the United Kingdom, PMI data is expected to show that private sector output expanded at the slowest rate since March due to a deceleration in service sector activity and another fall in manufacturing production.

In Asia, all eyes will be on the Bank of Japan’s monetary policy decision, as signs of steady inflation and relatively robust growth could drive the central bank to hint at future tweaks to its yield curve control policy. S&P Global will also divulge PMI data for July. In China, the Communist Party’s Politburo isl likely to meet and discuss plans aiming to boost economic recovery. In the meantime, South Korea will release its GDP growth rate for the second quarter and confidence indices for July. In Australia, a key week of economic release will be centered around its second-quarter inflation rate, July PMI figures and June retail sales.