Weekly Outlook, 12-16 July

Banks meetings and Earnings!

By: Ahura Chalki

Market analyst – IFC Markets

This week everything is about the banks! Central banks in New Zealand, Canada, and Japan will have monetary policy meetings. In contrast, JPMorgan, Goldman Sachs, Bank Of America, City Group, Wells Fargo, and Morgan Stanley will have earnings reports. Not just that, we have to follow up on fundamental data from developed economies as well. Let’s take a quick look at the most important event for the week ahead.

US Inflation – Tuesday

While the inflation worries have subsided somewhat in the past few days, some investors still worry about that. Since the producer inflation (PPI) in May jumped to 6.6%, which is the highest annual level in over ten years, we have seen US CPI jump sharply from 1.4% to 5% in May. And despite that the FED officials have admitted that inflation has been higher than initial expectations, they are still emphasizing that it will be temporary. Expected numbers are supposed to help the US Dollar strength to holds its current uptrend towards higher levels.  

 

UK Inflation and Employment numbers – Wednesday & Thursday

Same as the US and China, inflation in the UK also was one of the main worries for investors, especially with Brexit-related disruption. Here in the UK, the rising producer inflation, from 0.2% from the end of last year t 9.9% in April, increased the risk levels. 

On the other hand, Thursday, we will have the latest ILO unemployment rate for May. It is expected to show the number of unemployed people to reduce as the economy continues its reopening process. But we are expecting to see the unemployment rate-raising to 4.8% from 4,7%. Generally, estimated data from the UK should not be that much supportive of the Pound. 

 

 

Chinese data – Thursday. 

The final Retail Sales for June are expected to be unchanged, while for GDP, we are waiting to see the rise at 13.6% quarterly and 8% Yearly base. Generally, we ate not waiting for any significant changes to be anticipated in the slow growth in China. Last Friday, the People’s Bank of China cut its bank’s reserve requirement ratio by 50 basic points, confirming that economic rebound in the second biggest global economy is not going well as it’s was expected earlier. Along with the expected slow decline in Retail sales numbers, industrial production also must be lower well, down from 8.8% to 8%. 

Central Banks meetings. 

Wednesday In New Zealand and Canada and Friday in Japan, central banks will have interest rate decisions and monetary policy meetings, and Friday Bank of Japan will meet. We are not expecting any changes in none of them about the interest rates, and they all will leave the rates at the current levels. The only question is the Bond purchasing amount. In New Zealand and Canada, banks may begin their public discussion of tapering. But In Japan, investors are still expecting to continue monetary easing, and special programs will be extended if necessary. Nikkie 225 is in a slow downtrend; however, more support from the Japanese stock markets is expected to be seen with expecting policies. 

 

And finally, Earnings reports. 

Expectations are over, and from this week, earnings reports will be started. As always, the first week is the banking week, and the biggest US banks, as you can see, the picture will be reporting this week. The banking sector is one of the best-preformed sectors in the first half of 2021. Also, this week, we should not forget about the United Health Group, Delta airline, and Pepsi. Since the overall outlook for the market is positive and we are waiting for positive reports, higher numbers in SP500. 


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