Markets may remain weak after the recent decline as investors focus their attention on indicators for major economies that are updated this week.
After the market turbulence in recent weeksthis week several will be published crucial economic data and eventssuch as the second reading of the euro zone’s quarterly GDP, the US inflation figures for July and the decision of the Reserve Bank of New Zealand on interest rates.
Despite the signs of recoverymarket volatility may persist depending on How investors react to these economic indicators and the policies of the central banks.
European markets
This week, the focus will be on the preliminary eurozone GDP datasince economic growth is a key factor that the European Central Bank (ECB) uses to configure its monetary policy.
GDP readings come in three versions: preliminary ‘flash’, ‘flash’ and revised data. Preliminary figures indicate that the eurozone economy grew by 0.3% quarter-on-quarter, after the stagnation of the first quarter and the negative growth in the last quarter of 2023. Flash data is expected to confirm this 0.3% growth.
Germany will also publish his ZEW economic index for Julya crucial indicator of the eurozone’s economic prospects. Germany has been greatly affected by theRussia’s aggression in Ukraine from 2022.
The German economy has improved in 2024
The latest data shows that the German economy has improved in 2024with the ZEW index rising for the seventh consecutive month in June. Although it fell in Julyit seems that it may still reflect a positive outlook.
In it United Kingdoma series of key data will be published this week, such as CPI, retail sales and employment figures for Julyas well as the June GDP reading. Inflation fell to 2% year-on-year in June, aligning with the target Bank of England.
The first rate cut since 2020
He Bank of England applied his first rate drop from 2020 earlier this month, causing sterling to fall sharply. However, a inflation spike could delay further rate cuts and potentially support the pound.
Meanwhile, it is expected that the UK unemployment rate increase 4.5% in June, compared to 4.4% in May. It is expected that average income increases by 4.6% in the three months to June, a slower pace compared to the previous 5.7% growth. This moderation in wage growth could indicate a further cooling of inflation.
Markets in the United States
The US CPI in July will be crucial for Wall Street and world markets, since it serves as a pmain indicator for the decisions of the Federal Reserve regarding interest rates.
He consumer price index annual rose 3% in June, marking the smallest increase since June 2023. For July a similar increase of 3% is expected. However, a higher than expected reading could lead the Federal Reserve to delay its decision on a rate cut and could once again unsettle the stock markets.
Other key economic data are the Production Price Index (IPP) and retail sales for July. The PPI, which measures factory costs and is a important indicator of inflationincrease 0.2% compared to the previous month, after the year-on-year increase of 2.6% registered in June, the highest since March 2023.
Markets in Asia
The RBNZ’s decision on interest rates It is an important development for the Asia-Pacific region. In July, the bank suspended the rate hike for the eighth consecutive timebut has adopted a more moderate stance due to slowing economic growth and rising unemployment.
Despite this change, analysts expect the RBNZ keep the official type in this meetingsince annual inflation remains at 3.3%, above the target of 1-3%.
China will publish several key economic indicators in July, such as industrial production, retail sales and fixed asset investment. These indicators will provide information about the country’s economic trajectory, and the consensus suggests that the China economic recovery could continue to accelerate.
Situation in Australia
Lastly, the Australian wage growth rate and employment data They will also influence the Australian dollar and local stock markets this week after a 2.6% year-on-year increase in June, the highest since March 2023.
It is expected thats retail sales datawhich reflect the purchasing power of consumers, grew 0.3% month-on-month after stagnating in June. A higher-than-expected retail sales data could signal a greater inflationary pressure.
