In-depth Analysis

Weekly Outlook 18-22 July

 

  • On Monday 18th: CPI for New Zealand.
  • On Tuesday 19th: RBA meeting minutes, employment figures from the UK, and inflation figures in Europe.
  • On Wednesday 20th: RBA Governor Philip Lowe speech, European and Canadian CPI, and figures from the U.S. housing market.
  • On Thursday 21th: Bank of Japan and the European Central Bank’s meetings, U.S. Initial Jobless Claims and the Philadelphia Fed Manufacturing Index.
  • On Friday 22th: Manufacturing and Service PMI around the world and Retail Sales from the UK and Canada.

Global indices had another very volatile and tumultuous week last week, as concerns about a global recession and an energy crisis in Europe intensified – not to mention that inflation figures aren’t slowing down, and that fears of new Covid-19 lockdowns in China are worrying investors.

Investors are also mulling over the fact that central banks in big economies are becoming increasingly aggressive – Canada’s Bank of Canada (Banque du Canada) voted for a full 100 basis points up to 2.5% last Wednesday, for example. Investors will closely monitor the Bank of Japan and the European Central Bank meetings and speeches later this week.

While Eurozone government bond yields fell last week, they continued rising in the United States, with the yield curve inversion still sending worrying signals about an upcoming recession due to a weakening economy. The inversion between the 2-year and the 10-year U.S. notes reached a new record, one that hasn’t  been seen since 2000.

Other headlines of last week:

  • The euro reached parity against the USD for the first time in two decades,
  • The dollar index reached its highest level in 20 years above $107,
  • Gold reached its lowest level in a year below $1,700,
  • Oil prices dropped below $95 per barrel for the first time since Ukraine’s invasion before bouncing back,
  • Industrial metals and agricultural products kept tumbling with copper prices at their lowest level since 2020, and wheat and corn prices close to their pre-Ukraine invasion war.

The earning season for Q2 will truly kick off this week, so be sure you’re up-to-date with the firms that publish their earnings so you can take advantage of short-term volatility, to buy companies you want to add to your portfolio at a discount, and better protect your positions.

Let’s have a look at the most important economic release traders should monitor this week.

 

Monday 18th of July

Commencing on the 11th of July, the only news worth monitoring on Monday is the CPI figures of New Zealand for the second quarter 2022. While the quarterly inflation rate for the March 2022 quarter reached 1.8%, the annual inflation rate reached 6.9%. Markets expect quarterly inflation to slow down to 1.5% for Q2 2022, and the annual inflation rate to accelerate to 7.1%. This data might help traders determine if the RBNZ will slow down or speed its tightening monetary policy pace, which will definitely impact the NZD.

Most important company announcements of the day:

  • IBM
  • Bank of America
  • Goldman Sachs

 

Tuesday 19th of July

Tuesday trading day starts off in Australia with the RBA meeting minutes. Investors will be watching for any signs that officials in Australia are thinking about following other, more aggressive central banks like the Fed and the BoC after two consecutive 50-bps rate increases.

Then in the United Kingdom, we’ll get some data about the local employment situation with the Average Earnings Index, the Claimant Count Change, and the Unemployment Rate.

As the GDP for the previous two months was revised upward, and the British economy managed a surprise expansion in May, tighter monetary policy didn’t affect the economy as much as expected. This leaves room for the Bank of England to potentially accelerate rate hikes in August if inflation continues rising, especially if the employment situation remains solid.

BOE Governor, Andrew Bailey, is also expected to speak at the end of the day, which might trigger higher volatility.

Moving on to Europe, investors will monitor inflation figures with the annual Core CPI and the CPI for June expected to reach 3.7% and 8.6% respectively.

Finally, figures about the state of the construction sector in the United States in June will be published, with Building Permits expected to weaken to 1.69M from 1.70M and Housing Starts expected to increase to 1.60M from 1.55M.

Most important company announcements of the day:

  • Novartis
  • J&J
  • Netflix
  • Hasbro
  • Halliburton
  • Alstom

 

Wednesday 20th of July

We’ll start the day in Australia with a speech from the RBA Governor, Philip Lowe.

In Europe and in Canada, investors will be monitoring CPI figures. Yearly CPI is expected to increase to 9.2% in June from 9.1% a month earlier in the United Kingdom. On the other side of the Atlantic, the annual Core CPI is expected to slow down to 5.9% in June from 6.1%, and the monthly June CPI is also expected to decrease to 0.9% from 1.4%.

Moving on to the United States, Existing Homes Sales and Crude Oil Inventories will be published.

Most important company announcements of the day:

  • Tesla
  • Dassault Aviation
  • Ipsos
  • Biogen
  • Baker Hughes Company
  • Alcoa

 

Thursday 21th of July

On Thursday, traders will start the day by analyzing the Trade Balance of New Zealand and Japan.

Then, they will mostly focus on the Bank of Japan and the European Central Bank (ECB)’s meetings. While the Bank of Japan is expected to vote for a status-quo on its interest rates at -0.10%, the ECB declared in its previous meeting that investors should expect a 25 basis point increase during the July meeting, which should bring the deposit facility rate to -0.25% from -0.50%. The following press conference will be closely watched to get clues about upcoming ECB’s moves.

At the same time, the U.S. Initial Jobless Claims (240K) and the Philadelphia Fed Manufacturing Index (-2.5) will be published.

Most important company announcements of the day:

  • AT&T
  • Philip Morris
  • American Airlines
  • Mattel
  • Thales
  • Nokia
  • SNAP
  • Publicis
  • Groupe SEB
  • Ubisoft Entertainment
  • SAP
  • Roche Holding

 

Friday 22th of July

To finish the week, investors will get data about Manufacturing and Service PMI from Australia, Japan, the United Kingdom, Europe as a whole, and from individual European countries like France and Germany, as well as from the United States.

The latest British and Canadian retail sales figures will also be published on Friday, which will help investors determine new consumer spending habits and how the overall economic activity is performing.

Most important company announcements of the day:

  • American Express
  • Schlumberger
  • Twitter
  • Verizon

 

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