The US stimulus debate is likely to roll on this week after Donald Trump signed four presidential orders over the weekend aimed at helping Americans cope with the economic fallout from the pandemic, following the collapse in talks with Democrats over a Congressional rescue package.
The orders came as the US edged closer to becoming the first country to confirm 5m coronavirus cases.
Beirut will continue to grapple with the aftermath of last Tuesday’s explosion, which killed more than 150 people, injured thousands and left about a quarter of a million people homeless.
French president Emmanuel Macron called for an urgent aid effort on Sunday and warned that the future of Lebanon and the region was at stake.
There have also been many protests directed at Lebanon’s entrenched political elite, who are seen as corrupt and incompetent and widely held collectively responsible for the explosion, and these could continue through the week.
The flow of earning reports isn’t too frantic as the US earnings season pauses for breath ahead of the big retailers’ updates next week, but there’s still a good selection to watch out for from around the world with the pandemic once again the overriding factor.
US inflation data and retail sales will be important in the week ahead, and there are also some key data points from China and a host of gross domestic product figures from Europe.
Earnings
On Monday the disruption to travel brought by Covid-19 is expected to weigh on Marriott International and Royal Caribbean Cruises.
Occidental Petroleum reports the same day, when falling energy demand and the dive in oil prices is expected to take its toll. Investors will be on the lookout for any impairment charges and also any plans to pay down the debt it amassed in its blockbuster acquisition of Anadarko Petroleum last year.
Supply chain constraints and weaker consumer spending will weigh on networking equipment maker Cisco Systems on Wednesday, but California-based chip and display equipment maker Applied Materials is confident a supply chain rebound will help it recover sales lost due to the pandemic and lead to revenue rises when it reports on Thursday.
Nasdaq-listed Baidu, China’s leading search engine, also reports on Thursday, when advertising spending cuts are likely to hit revenues.
Elsewhere Apple supplier Foxconn briefs on second-quarter earnings on Wednesday when investors will look for updates on the impact to global tech demand and the Taiwanese group’s push to diversify supply chains.
Deutsche Telekom reports on Thursday when fresh guidance is expected to take into account the takeover by US unit T-Mobile of smaller competitor Sprint.
German industrial conglomerate Thyssenkrupp is expected to report a big third-quarter operating loss of about €1bn on Thursday. Investors will also look for any updates on how the beleaguered group intends to use the proceeds from the sale of its elevator division.
And finally to the UK, where average room revenues will be in focus when Holiday Inn owner InterContinental Hotels reports on Tuesday after global travel came to a standstill during lockdowns.
Holiday operator Tui reports on Thursday, when renewed quarantine measures and job cuts will be in focus.
Investors will on Thursday wait to see if Ladbrokes-owner GVC has any plans to follow rival William Hill and shift focus away from shops after the pandemic lockdown accelerated a trend towards online gambling.
Others to watch this week include Canopy Growth, Lyft, NetEase, DraftKings, National Express, Just Eat Takeaway, Bellway, SoftBank, Danish brewer Carlsberg, Domino’s Pizza, renewables group RWE and UK insurers Prudential and Admiral Group.
Central banks
A quiet week with none of the big-hitters in action. Policymakers meet in New Zealand on Wednesday, Egypt on Thursday and Peru on Friday, with all expected to keep rates on hold.
Mexico is expect to cut its rate for the tenth meeting in a row on Thursday.
Economic data
Two key readings from China this week that should help to cast some light on how close the world’s second-largest economy is to a full recovery.
First up on Monday is the official consumer price index, with economists surveyed by Bloomberg predicting year-on-year inflation of about 2.6 per cent for July. This contrasts to a jump above 5 per cent when lockdowns were imposed across the country early this year.
However it is worth bearing in mind that pork prices have risen sharply due to swine fever and speculators have pushed corn futures up by 20 per cent since Covid-19 went nationwide in February. Both factors could help push the inflation gauge above expectations
Retail sales figures due on Friday are expected to paint a mixed picture. The consensus forecast is for a rise of 0.2 per cent in July — ending a six-month run of contraction, but economists at Bank of America have pencilled in a year-on-year drop of 0.5 per cent.
A big miss for retail sales could give policymakers in Beijing reason to reconsider their reluctance to deploy more serious stimulus measures during the pandemic fallout.
Investors seeking greater insight into the health of the US consumer will receive two important data points on Friday — the retail sales report for July and the preliminary figures for the University of Michigan’s index of consumer sentiment for August.
Economic activity had begun to stabilise as US states and cities started to slowly emerge from coronavirus lockdowns, but the emergence of virus hotspots across the nation since has forced many local officials to reverse their reopening plans.
Disappointing figures on Friday would heap additional pressure on the Federal Reserve to act soon, turning investors’ focus to the upcoming meeting in mid-September.
Further reading
On Thursday initial claims for unemployment benefits for the week ended August 8 are due. Last week the number fell by 249,000 to a seasonally adjusted 1.2m.
The UK has labour figures out on Tuesday and then on Wednesday the country looks set to suffer one of the biggest growth contractions in Europe for the second quarter, though this is partially explained by its smaller first-quarter fall.
GDP readings are also due for the Netherlands, Finland, Denmark and in economies across eastern Europe including Russia, Poland and Ukraine.
Source: Economy - ft.com
