Global Week Ahead: Central Banks, PMIs and Nonfarm Payrolls
Central bank reports and commentary will be among the highlights of the week in Europe and beyond, though June jobs data from the U.S. on Friday will eclipse local figures after weak May numbers appeared to change the course of Fed monetary policy.
The first week which has any semblance of "business as usual" after the shock Brexit referendum outcome of June 24 kicks off quietly. With the U.S. closed on Monday for the Independence Day holiday, the Monday highlight from the eurozone is May producer price data. That is expected to show yet another month of annual price deflation, at a predicted pace of 4.1%, after prices fell 4.4% on the year in April. However, on the month prices are seen picking up by 0.3% after declining by the same amount in April.
Amid worries about the impact of Brexit on U.K. house prices, and therefore homebuilders, also of interest is Markit's purchasing managers' index for the U.K. construction sector, which analysts expect to have dipped to 50.5 in June from 51.2.
On Tuesday in the U.K., the Bank of England releases its twice-early financial stability report, which will be scrutinized for comments about Brexit. On Thursday, Gov. Mark Carney signaled "some monetary easing" over the summer to offset the Brexit fallout, but he also said monetary policy alone won't be able to deal with the economic shock of the U.K.'s withdrawal from the European Union.
Also on Tuesday, Markit gives updated PMI data for June for the services sector as well as its composite indices.
Markit's so-called flash composite PMI estimate for the eurozone for June put the index at a 17-month low of 52.8, down from 53.1 in May. The flash services sector PMI, as of the June 23 release, fell to 52.4 from 53.3, an 18-month low.
Also on Tuesday, Eurostat, the European Union's statistics arm, gives May retail sales data. Retail sales rose 1.4% year-on-year in April and were flat on the month. Analysts are looking for annual growth to have accelerated to 1.7% in May and for 0.3% month-on-month growth.
On Wednesday the European Central Bank holds a meeting -- but not one to set rates. Statements and press conferences after these meetings are delivered on an ad hoc basis.
Earlier that morning, the European Central Bank President Mario Draghi will address an ECB statistics conference, and his comments will be scrutinized for any hint of how Brexit has changed his monetary policy thinking.
On Thursday, the ECB will release the minutes of its June 2 rate-setting meeting. After that meeting, Draghi said "inflation rates are likely to remain very low or negative in the next few months before picking up in the second half of 2016" and said the central bank will, if necessary, use "all the instruments available within its mandate" to achieve price stability.
Also on Thursday, the U.K.'s Office for National Statistics releases industrial and manufacturing output for May.
In April, industrial output rose 1.6% on the year and 2% month-on-month, while manufacturing production rose 0.8% year-on-year and 2.3% on the month, the largest rise since July 2012. But analysts expect both month-on-month gauges to have contracted by 0.9% in May, according to data compiled by FXStreet.
On Friday, the German Federal Statistical Office releases German trade data for May. In April, exports were unchanged month-on-month though are expected to have risen 0.4% in May. Imports are expected to have fallen 0.2% in May, after unexpectedly falling by the same amount in April. That April decline punctured the theory that rising domestic demand would offset exports that have weakened because of problems in other economies.
The highlight of the week is June nonfarm payrolls figures from the U.S. After weak May numbers appeared to dissuade Fed policy makers from near-term rate rises, analysts polled by Reuters are looking for 175,000 jobs to have been created, after 38,000 in May, and for the unemployment rate to have edged up to 4.8% from 4.7%.
From Asia this week, look for Markit services sector PMI data for China and Japan, released in conjunction with Caixin and Nikkei, respectively, on Tuesday. Also on Tuesday, the Reserve Bank of Australia sets rates. It's expected to leave its cash rate unchanged at 1.75%. The meeting comes after Federal elections over the weekend left no party with a clear majority.
On Thursday, Bank of Japan Gov. Haruhiko Kuroda speaks. Lackluster consumer price figures, Tankan business sentiment and industrial output data last week fed expectations that the Japanese government could introduce new stimulus measures as early as this month, and that the Bank of Japan could cut rates again sooner rather than later.
The Bank of Japan is scheduled to hold its next monetary policy meeting on July 28 and 29. On Jan. 29, it unexpectedly cut its deposit rate to minus 0.1%.
Expectations of monetary easing worldwide boosted stocks last week and pushed bond yields in Japan, the U.S. and the U.K. to record lows. The FTSE 100 ended the week at 6,577.83, up 1.13% on Thursday's close and more than 7% higher than a week earlier, its best weekly performance in five and a half years. The S&P 500 ended up 0.19% on the day on Friday at 2,102.95. That was 3.2% higher than a week earlier and its best weekly showing so far this year.
Corporate numbers this week include full-year results on Tuesday from Apple (AAPL) - Get Report supplier and short-lived bid target Imagination Technologies (IGNMF) . (Apple said in March it had held takeover talks with the company). Peel Hunt expects the chipmaker to have swung to a pretax loss of £20.1 million ($26.7 million) from a profit of £17.1 million and for sales to have fallen to £122.2 million from £177 million after the company renegotiated certain contracts and wrote off bad debt.
On Thursday, Sports Direct International (SDISY) announces full-year results, where it is expected to post declining revenue, falling same-store sales and lower pretax profit and broadly flat Ebitda of about £380 million. On June 24, after the pound slumped following the Brexit vote, the retailer announced that foreign exchange volatility will impact some purchases for the current fiscal year and beyond because of gaps in its currency hedging.
Apple is held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holdings here.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.