WEEKLY MARKET SNAPSHOT 14-19/8 | GDP’s for Germany, Europe and Japan, will deliver a snapshot as to the overall health of the global economy
The GDPs (gross domestic product) annual growth figures for several countries, are published during the coming week. When combined with several CPIs, these high impact economic calendar metrics, will be monitored carefully for signs of weakness and or stagflation in the various economies. Coming after the recent projections published by the IMF, who forecast a reduction in their global and individual countries’ GDPs, analysts and investors will be sensitive to any major discrepancies, between the forecasts and the printed figures.
Japan’s GDP is forecast to show significant improvement, rising to 2.5% Q2 annually, from the 1% recorded in Q1. German YoY GDP is forecast to remain constant at 2.9% in Q2, Italy’s GDP is predicted to rise modestly, above the Q1 figure of 1.2%. Whilst the Eurozone’s GDP is expected to come in around the 2.1% YoY figure registered in Q1. The ECB will reveal the reasons behind its recent decisions to maintain the interest rate at zero and to keep the asset purchase scheme unchanged.
Looking at CPI and given the focus on Brexit issues, the UK’s latest inflation figures will be carefully analysed. With sterling recently falling in value versus the euro, but rising versus the U.S. dollar in July, the impact on imported inflation is likely to be benign, with CPI remaining at 2.6%, despite the Eurozone being the UK’s main trading partner. Canada’s CPI is forecast to remain unchanged at 1%.
Australia’s latest unemployment and employment data will be revealed during the coming week, and coming the same week as Australia’s central bank publishes its reasons for maintaining its current monetary policy stance, investors will look for clues, from the overall reports of the country’s employment figures, that the RBA is right to maintain its dovish stance.
Sunday begins with the latest Japanese annualised GDP data for Q2, forecast to come in at 2.5%, a significant improvement on the 1% growth recorded in Q1. Consumption and business spending data for Japan is also released. New Zealand publishes its performance services index for July and the reading for retail sales (excluding inflation).
Monday morning New Zealand also publishes its latest dairy auction performance data, a vital component to the country’s economic performance, given its reliance on dairy exports to Asia. With Chinese data disappointing lately, investors’ focus will turn to the last metrics on retail sales and industrial production for evidence that the economy is still firing on all cylinders. YoY industrial production is forecast to fall, but YTD it’s expected to remain constant, at 6.9% in July. From Europe monthly and YoY industrial production data will be revealed, the 4% annual growth revealed in May, is predicted to be maintained.
Tuesday morning the RBA Australia’s central bank publishes its meeting minutes, outlining its interest rate decision and overall current monetary policy. A series of German GDP data is released, with the expectation that the YoY Q1 figure of 2.9% will be maintained, or improved on. A Q2 figure of 0.6% growth is predicted. The most prominent series of data published on Tuesday concerns the UK’s latest inflation figures, the current CPI of 2.6% is expected to remain unchanged, with the month on month figure being 0.0%. RPI is forecast to come in unchanged at 3.8%. Producer input prices for July are predicted to come in at a figure close to the 9.9% recorded in June, with export prices forecast to have risen by 3.3%. U.K. house prices are predicted to reveal a 4.7% YoY increase in the month of June. USA data involves import and export prices and advanced retail sales, which are expected to come in up 0.4% in July. Business inventories for June are predicted to reveal a 0.4% increase, whilst from Canada July’s existing home sales are expected to reveal an improvement, from the dramatic -6.7% fall recorded in June.
Wednesday begins with Australian data, after RBA official Mr. Ellis gives a speech in Canberra, the Westpac leading index is published, as is the wage cost index. As attention turns to Europe Italy’s GDP is revealed, forecast to come in at a figure similar to the 1.2% growth recorded in Q1. Europe’s Q2 GDP is expected in at a figure similar to Q1, at 2.1%. The UK’s latest employment/unemployment data series is published; 175k new jobs are forecast to have been added, with the unemployment rate forecast to remain unchanged at 4.5%. YoY wage growth is expected to remain steadfast at 1.8%. After New York opens, housing data from the USA comes into focus; both starts and building permits are predicted to fall significantly.
Thursday sees Australia’s unemployment rate published; forecast to come in unchanged for July at 5.6%. European news begins with the UK’s retail sales, expected in at circa 3% growth YoY. The Eurozone’s CPI is excited to remain unchanged at 1.3% YoY. The various trade balances for the Eurozone are expected to remain consistent and in surplus. The ECB will publicise its account of the July monetary policy meeting. As always on a Thursday, USA new jobless claims and continuing claims are published. The Philly Fed business outlook is forecast to fall to 17.9 from 19.5 for August. Industrial production is expected to show a fall in July, to 0.1% from 0.4% in June.
Friday witnesses German producer price data published, as is the Eurozone’s current account and construction output data. Both data series are forecast to remain relatively unchanged. As attention turns to North America, Canada’s CPI is expected in unchanged at 1% YoY. The university of Michigan confidence reading for August is expected in at 93.8, a 0.4 increase from July. The Baker Hughes rig count for the USA, as is tradition, closes the week’s economic calendar events.
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