In-depth Analysis

Weekly Outlook 8-12 August

Focus on PPI and CPI figures

  • On Monday 8th: New Zealand publishes its Inflation Expectations for July.
  • On Tuesday 9th: U.S NFIB Business Optimism Index for July, nonfarm productivity, and EIA Short-Term Energy Outlook for analysis on the U.S and international crude oil, petroleum products, and gas prices.
  • On Wednesday 10th: U.S July Consumer Price Index will be released by the Bureau of Labor Statistics, as well as from other countries like Italy, Germany, and China, and the Energy Information Administration will measure the weekly change in the number of barrels held by firms in the U.S.
  • On Thursday 11th: The U.S publishes its Producer Price Index (PPI), which tracks inflation from the perspective of retailers and producers.
  • On Friday 12th: The Preliminary Estimate for the U.K’s GDP Growth Rate for the second quarter of 2022 will be published, the August preliminary reading of the Michigan Consumer Sentiment Index showing an insight into consumer confidence will also be released, and U.S data for month on month import and export prices to be published.

Last week in review

Despite a good start to the week, a mixed response emerged to the far stronger non-farm jobs report than was expected by analysts, paving the way for the Federal Reserve to continue raising rates in September to tame inflation. Treasuries were sold off as a result on Friday.

Gold extended its winning streak to a third week in a row and climbed to a new high of $1,775, as a weakening dollar and rising yields on U.S. Treasury securities drove up demand for the traditional safe-haven asset. Silver, palladium, and platinum also slightly increased.

The threat made by Russia to restrict the amount of gas supplied to Europe has been carried out. Therefore, the possibility of a gas shortage over the winter is growing at an alarming rate, supporting the price of gas. Over the course of the previous week, the price of Brent and WTI crude oil fell by over 10%, at $94 and $88 per barrel, respectively.

Weekly outlook

This coming week the focus will be on the Consumer Price Index (CPI) report for a look at the rate of consumer inflation on Wednesday, following along on Thursday with the Producer Price Index (PPI). On Friday the U.K will release its GDP numbers for the second quarter, and the Michigan Consumer Sentiment Index (MCSI) will also provide insight into consumer confidence with the preliminary August reading. Most of the biggest worldwide companies have already posted their earnings reports, but there are still a few left this week.

Monday 8th of August

Investors will be watching the release of the Inflation Expectations report out of New Zealand for insight into the percentage that businesses believe the price of goods and services will change and how this will move the NZD. The figure came out at 3.1% compared to the previous 3.3%.

Most important company announcements of the day:

  • BioNTech
  • Novavax
  • Dominion Energy
  • American International Group

Tuesday 9th of August

The NFIB Business Optimism Index is published on Tuesday in the U.S, and shows the economic activity of small businesses, such as future plans for expansion, hiring, sales, and earnings trends. It is expected to remain stable at 89.7, marking the seventh month in a row below the 48-year average of 98.

A similar report in Australia is also released by the National Australia Bank, in a survey of around 350 companies. These both provide insight into whether conditions are strengthening or weakening for businesses, therefore impacting the economy.

Meanwhile, the Energy Information Administration (EIA) will publish its near-term outlook on different energy markets, which can have an impact on energy commodities.

Most important company announcements of the day:

  • iRobot Corp
  • Hyatt Hotels
  • Emerson Electric
  • Coinbase

Wednesday 10th of August

The most important release of Wednesday will be the Consumer Price Index of many countries like in the U.S, China, Germany, and Italy for instance. This is an important measure of the price changes of key goods and services that central banks are watching and using as part of their interest rate decisions.

Most important company announcements of the day:

  • Disney
  • Fox Corporation
  • Honda Motors

Thursday 11th of August

In the U.S, the Initial Jobless Claims report will become available. This is the number of people who have declared themselves to be unemployed by filing for unemployment insurance. The release is expected to increase to 262K, from 260K.

Additionally from the U.S, the monthly Producer Price Index (PPI) Inflation rate for July will be released. This measures the raw material cost of goods and services which if increased, could be passed on to the consumer, or vice versa if decreased. This value is watched by the FED as a key measure of inflation. The July PPI is expected to have increased 0.3% after increasing 1.1% last month.

Most important company announcements of the day:

  • Baidu
  • Brookfield Asset Management
  • Cardinal Health

Friday 12th of August

The U.K will be eagerly awaiting the publishing of its preliminary estimates for Gross Domestic Product (GDP) figures on Friday for the second quarter of 2022, as it will be a detailed look into the economic health of the country. The yearly GDP for Q2 is expected to reach 2.8%.

The monthly UK Manufacturing and Industrial Production for the month of June will also be published, both showing a slow down in the country’s production level according to analysts’ forecasts.

Back in the U.S, the University of Michigan Consumer Sentiment Index, which compiles results from a survey of 500 consumers that compares current and future economic conditions and overall consumer confidence in its preliminary reading, will be published and should reflect an improvement, as the Index is expected to reach 52.2 after 51.5.

Import and Export price reports are also released today in the U.S comparing the difference between goods and services bought and sold domestically. Both are expected to have slowed down.

Most important company announcements of the day:

  • Spectrum Brands
  • BHP Group

 

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