Weekly Outlook, 19-23 July

Earnings and delta, primary market mover

By: Ahura Chalki

Market analyst – IFC Markets

While the Delta virus spreading all around the globe and Floods continue to plague Europe, Central banks in China, and Europe, will have an Interest rate decision and monetary policy meeting. On the other hand, earnings reports will continue with more companies this week, and heavy economic data will get the attention. Let’s take a quick look at the week ahead and the most important events. 

The second week of Earnings and First FAANG member! 

After the first week’s bank reports that were not as good as expected, we are preparing for the second week. This week’s focuses will be on IBM, Coca-Cola, Johnson & Johnson, American Airlines, American Express, Twitter, and first FAANG member Netflix. For Netflix, despite easing the lockdowns, for Q2, revenues are still expected to be healthy at $7.3bn. 



RBA Meeting Minutes – Tuesday

RBA is trying to get back to its regular monetary policies as soon as possible. Same as the reserve bank of New Zealand, in Australia, the central bank began tapering in its previous meeting. While we are not waiting for any rate hike anytime sooner than 2024, the meeting minutes will focus on bank policies and economic outlook. Aussie moves in a clear downtrend, as the effect of the central bank’s policy and a slowdown in China’s economic growth, which will mean fewer purchases of Australian raw materials. 



People Bank Of China, and its policy meeting- Tuesday

For this week’s meeting, the Chinese central bank may take another step to cut the reserve ratio requirement, but the 3.85% rate is not expecting to be changed. Unlike most other central banks, the People Bank of China holds its ultra-easy monetary policy and support mainly from medium and small businesses. This policy is expecting to keep the weaker position of the Chinese Yuan against the USD. 



ECB policy meeting and Interest Rate – Thursday

With upgrading the GDP forecast for 2021 from 4% to 4.6%, now it is expected that the European central bank to start scheduling or talk about scheduling some deadline for its PEPP plan, but still, no one expecting changes in rate levels. Also, Christine Lagarde’s press conference after the meeting should give us more information about ECB’s new policy and its interest rate targets. Euro is weakening against the USD in past weeks, and still, it is expecting to be continued. 



EU PMI data – Friday

Friday, most developed countries will publish their PMI data. In Europe, and while most Eurozone members ease the restrictions, especially with the Summer holidays, we expect positive numbers from EU members, especially Germany and France, for both the Manufacturing and Service sectors. Unlike positive expectations, we are waiting for a bit more decline in German DAX to see a more profound number before the ECB meeting. 



UK PMI data – Friday

In the UK, according to the published data in retail sales, manufacturing, and construction surveys, we can see that economic growth slows down and will affect the PMI data. For July numbers, in both Service and manufacturing sectors here in the UK, a little bit decline is not fare than perspectives. Giving these numbers, Footsie is still expected to continue its downtrend correction. 



US data – Tuesday and Friday 

This week, other than earning reports, we do not have many essential data from the United States. However, Tuesday Housing starts and Friday’s PMI numbers. For Housing data, we are waiting for better than expected numbers. Service sectors are supposed to increase PMI numbers as summer holidays are the leading market driver for this section, but the manufacturing industry is slowing down. With these expectations and market fears over the Delta variant of Coronavirus, a bit more decline in S&P500 is still expected.


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