Dubai: As the busy corporate earnings season begins to wind down, market attention shifts to more economic data that’s coming in, which investors will sift through to gauge the progress of global economic recovery amid the raging pandemic.
On the economic front it is still a relatively busy week, with gross domestic product (GDP) figures from Japan and the European Union (EU), and closely-watched inflation (consumer price index or CPI) data from the UK and Japan, and a variety of unemployment figures, being published in the week ahead.
US Fed minutes eyed
Additionally, the US Federal Reserve minutes will further fuel renewed talks over inflation, as last week’s economic figures in the world’s top economy warrants it, analysts note. Investors, focused on prospects for the US central bank tapering as labour conditions improve, have boosted the US dollar.
Fed policymakers, assessing when to start unwinding stimulus, will be worth watching. However, while the US economy grows robustly and the labour market rebounds, COVID-19 remains a headwind for markets and coming days should bring a fresh perspective on how consumers are faring.
US retail data expected
In the US, among other economy-related news, data on Tuesday is expected to show that US retail sales likely fell 0.2 per cent in July, after an unexpected rise in June.
As opposed to a number of economic data, on the corporate front, it is expected to be much quieter, as earnings season in the US begins to wind down, while a few major UK numbers are expected this week.
US earnings wind down
In the US, names like Cisco and NVIDIA will report results, while several major US retailers including Walmart, Target, Lowe’s and Home Depot will report quarterly results this week. Earnings are also due from Ross Stores, TJX Companies and Bath & Body Works.
These will curtain an incredibly upbeat US second-quarter results season. S&P 500 earnings are expected to have jumped 93.1 per cent, well above prior expectations of 65.4 per cent, according to Refinitiv IBES data.
UK miners report
Also, global miners BHP and Antofagasta will release results in the UK, along with house builder Persimmon.
New Zealand’s central bank meets on Wednesday and looks set to become the first major economy to lift interest rates since COVID-19 hit. Strong jobs data have cemented expectations of a hike, which would be New Zealand’s first since mid-2014.
New Zealand to hike rates?
The potential hike poses a stark contrast with 2020, when rates were slashed 75 bps to near-zero rates (0.25 per cent) and the threat of rates dropping below zero became a real possibility, with key economists in the region flagging as much last year.
Norway’s central bank meets
Elsewhere, Norway’s central bank is meeting on Thursday to most likely reiterate it will increase rates in September this year, possibly becoming the second lender to do so after New Zealand.
The Delta variant of COVID-19 has triggered outbreaks and lockdowns in few parts of Asia and elsewhere in the world, and this has resulted in uncertainty returning to markets.
Delta variant poses new risks
In Taiwan and New Zealand strict border controls appear to have kept the variant at bay, however, cities from Sydney to Seoul are finding it hard to contain infections.
In China, Delta has been detected in over a dozen cities, bearing down on a faltering economy, forcing economists to cut growth forecasts.