- On Monday 15th: Chinese GDP Growth Rate YoY, Chinese Industrial Production YoY and Chinese Retail Sales YoY
- On Tuesday 16th: German ZEW Economic Sentiment Index, Canadian Inflation Rate YoY and American Retail Sales MoM
- On Wednesday 17th: UK Inflation Rate YoY, American Building Permits Prel and Japanese Balance of Trade
- On Thursday 18th: UK Unemployment Rate, ECB Interest Rate Decision, and Japanese Inflation Rate YoY
- On Friday 19th: UK Retail Sales MoM
Monday 15th of July
China's economy defied expectations in the first quarter of 2024, expanding at a robust 5.3% year-on-year. This outpaced market forecasts of 5.0% and marked the strongest growth rate since the second quarter of 2023. The positive performance can be attributed to two key factors.
Firstly, the Chinese government's ongoing support measures played a crucial role in stimulating economic activity. These measures likely included fiscal stimulus packages and targeted policies aimed at boosting specific sectors.
Secondly, the Lunar New Year holiday, which fell in January 2024, contributed to a surge in consumer spending. This temporary boost helped propel economic growth during the quarter.
However, market participants anticipate a moderation in China's economic pace. Their forecast is a decline to 5.0% growth for the second quarter (Q2) of 2024 when the data is released at 2:00 AM GMT.
Rephrase with paragraphs, without list and bullet points = China’s industrial production expanded by 5.6% year-on-year in May 2024, coming less than market expectations of a 6% rise and easing from a 6.7% growth in the previous month. Output slowed for manufacturing and utilities, while activity accelerated for mining . In terms of industries, 33 out of 41 major sectors posted growth. On a year-to-date basis, industrial output was 6.2% higher than the same period last year. Market participants expect Chinese Industrial Production YoY for June to decrease to 5.3% when the data is released at 02:00 AM GMT.
China's industrial sector witnessed a slowdown in growth momentum in May 2024. Year-on-year industrial production rose by 5.6%, falling short of market expectations of a 6% increase. This also marks a moderation compared to the 6.7% growth recorded in April.
The slowdown wasn't uniform across all sub-sectors. Manufacturing and utilities output experienced a decrease in activity, potentially indicating some challenges in these areas. However, the mining sector saw an acceleration in growth,suggesting continued strength in resource extraction. Despite the slowdown, 33 out of 41 major industrial sectors still managed to expand in May.
Looking at the bigger picture, China's industrial output for the first five months of 2024 remains positive. Year-to-date, it stands at 6.2% higher than the same period in 2023. Market participants are anticipating a further deceleration in June with industrial production growth to fall to 5.3% when the data is released at 2:00 AM GMT.
China's retail sector showed signs of recovery in May 2024, with sales expanding by 3.7% year-on-year. This marks an acceleration compared to the sluggish 2.3% growth recorded in April, which was the lowest in 15 months. The May figure also surpassed market expectations of a 3% gain, suggesting a stronger-than-anticipated rebound in consumer spending.
This positive momentum extends a streak of 16 consecutive months of growth in China's retail sector. It's the most robust growth since February 2024, highlighting a potential improvement in consumer confidence and willingness to spend.
Market participants predict a slowdown in June, with retail sales growth expected to dip to 3.2% released at 2:00 AM GMT.
Major Earnings Releases:
- GOLDMAN SACHS
Tuesday 16th of July
German economic sentiment offered mixed signals in June 2024. The ZEW Indicator of Economic Sentiment, a gauge of future expectations, rose to 47.5, marking the highest level since February 2022. This increase from 47.1 in May and exceeding forecasts of 50 suggests a cautiously optimistic outlook among German economists and analysts. They seem to believe that the future holds some promise for the German economy.
However, the current economic situation within Germany seems less rosy. The ZEW's current conditions subindex actually deteriorated slightly, dipping to -73.8 from -72.3. This missed expectations of -65, indicating that businesses might not be experiencing immediate improvement. This disconnect between future expectations and current conditions suggests a potential wait-and-see approach from German businesses.
Additionally, respondents to the ZEW survey seem to be factoring in recent higher-than-anticipated inflation rates. Their inflation expectations have ticked upwards slightly. This could potentially dampen consumer spending and further complicate the economic picture in Germany.
Traders will be closely watching this data when it's released at 9:00 AM GMT to gain a more comprehensive understanding of market sentiment towards the German economy.
Canada's annual inflation data for May 2024 surprised economists, when climbing to 2.9%, reversing a three-month trend of decline and exceeding market expectations of a further dip to 2.6%. This rise aligns with the Bank of Canada's (BoC) projections of inflation hovering around 3% for the first half of 2024. However, the halt in the disinflation trend (gradual decrease in inflation) has thrown a wrench into earlier assumptions that the BoC would continue easing monetary policy.
Market participants anticipate inflation to hold steady at 2.9% in June when the data is released at 12:30 PM GMT.
Consumer spending in the US continued to show signs of weakness in May 2024. Retail sales rose by a meager 0.1% compared to the previous month. This follows a downward revision of April's data, which now shows a 0.2% decline. The May figure also fell short of market expectations of a 0.2% increase, suggesting a potential slowdown in consumer spending.
This tepid growth can be seen as another indication of cooling consumer sentiment. With inflation remaining a concern and potentially impacting household budgets, consumers might be adopting a more cautious approach to spending.
Market participants predict a rise of 0.3% in retail sales in June when the data is released at 12:30 PM GMT.
Major Earnings Releases:
- Bank of America
- UNITEDHEALTH
- Morgan Stanley
Wednesday 17th of July
Inflation in the UK showed welcome signs of cooling in May 2024. The annual inflation rate, which measures the change in consumer prices over the past year, dipped to 2%. This marks the lowest level since July 2021 and aligns perfectly with the Bank of England's (BoE) target of 2%. This is a significant milestone, suggesting that inflationary pressures might finally be easing.
The decline can be attributed, in part, to a slowdown in food price inflation. This likely provided some relief for consumers facing rising costs of living. Additionally, the annual core inflation rate, which excludes volatile food and energy prices, also showed improvement. It fell to 3.5%, the lowest since October 2021, down from 3.9% in April. This suggests that underlying inflationary trends are also moderating.
Market participants are cautiously optimistic that the recent downward trend will continue. Their forecasts predict that the annual inflation rate will hold steady at 2.0% in June when the data is released at 6:00 AM GMT. This suggests they believe the slowdown might not be a temporary blip, but a potentially sustained shift. However, the BoE will likely continue to monitor inflation closely to ensure it remains on track towards the target and to determine if any adjustments to monetary policy are necessary.
Despite a slight upward revision, building permits in the United States remained subdued in May 2024. The seasonally adjusted annual rate settled at 1.399 million, reflecting a 2.8% decline from the previous month. This revised figure is marginally higher than the initial estimate of 1.386 million, but it still marks the lowest level since June 2020. This suggests a potential slowdown in new construction activity.
The reasons behind this decline could be multifaceted. Rising interest rates, ongoing supply chain disruptions impacting building materials, or a general economic slowdown could all be contributing factors.
However, market participants are looking ahead with some optimism. Their forecasts, to be released at 12:30 PM GMT,predict a significant increase in building permits for June, reaching 1.6 million. This suggests they believe the recent dip might be temporary, and the construction sector could see a rebound in the coming month.
Japan's trade deficit narrowed in May 2024, offering a glimmer of hope after a period of wider gaps. The deficit came in at JPY 1,221 billion, lower than the JPY 1,382 billion recorded in May 2023.
This marks the second consecutive month of a trade gap, even though exports grew at a faster pace than imports. This suggests that while Japan is still importing more than it exports, the gap is shrinking, potentially indicating some improvement in the country's export competitiveness.
Market participants are forecasting a further narrowing of the trade gap in June, with expectations pointing towards a deficit of JPY 400 billion to be released at 11:50 PM GMT.
Major Earnings Releases:
- ASML HOLD
- JOHNSON&JOHNSON
- US Bancorp
- Alcoa
- United Airlines
Thursday 18th of July
The UK job market showed signs of strain in the February to April 2024 period. The unemployment rate climbed to 4.4%,exceeding market expectations and marking the highest level since September 2021. This increase in unemployment suggests a potential weakening in the labour market compared to the previous three months, when the rate held steady at 4.3%. Market participants predict no change, with the rate holding at 4.4% for May, when the data is released at 6:00 AM GMT.
The European Central Bank (ECB) took a dovish turn in June 2024, lowering its key deposit facility rate by 0.25% to 3.75%. This move aligned with market expectations and marked a shift from the aggressive rate hikes implemented in 2023. Notably, the key rate had been raised to a record high of 4% in September 2023 to combat rising inflation.
While acknowledging this decrease, the ECB emphasised a cautious approach to future rate adjustments. They stressed their data-dependent policy, meaning they will make decisions based on incoming economic data, and a meeting-by-meeting evaluation. This avoids pre-committing to a specific path for interest rates, allowing for flexibility based on changing circumstances.
The ECB's primary goal remains curbing inflation and bringing it back down to their target of 2%. They reaffirmed their commitment to keeping policy rates sufficiently restrictive, suggesting potential for further adjustments if necessary to achieve this objective.
Despite the recent rate cut, market participants are anticipating a pause for the time being.
Inflation in Japan edged higher in May 2024, raising concerns about rising prices. The annual inflation rate climbed to 2.8%, marking the highest level since February and exceeding the 2.5% recorded in April. This suggests that price pressures are intensifying after a period of relative stability.
The increase wasn't limited to year-on-year comparisons. On a monthly basis, the Consumer Price Index (CPI) rose by 0.5%. This represents the sharpest increase since October 2023, highlighting potential short-term acceleration in inflation.
Despite the recent rise, market participants believe that inflation might hold steady in the near future. They predict an unchanged annual inflation rate of 2.8% for June when the data is released at 11:30 PM GMT.
Major Earnings Releases:
- Novartis
- TSM
- NETFLIX
- Abbott Lab
- American Airlines
- Newmont Goldcorp
- Nokia
Friday 19th of July
UK retail sales rebounded strongly in May 2024, defying expectations. After an upwardly revised decline of 1.8% in April, sales surged by 2.9% month-over-month. This marks the biggest increase in four months and significantly surpasses forecasts of a 1.5% gain.
The growth was particularly driven by non-food stores, which saw sales jump by 3.5%. This represents the strongest performance for this category since April 2021, following a slump of 3% in April. The improvement suggests a potential shift in consumer spending patterns, with a renewed focus on non-essential goods.
Looking at the bigger picture, year-on-year sales growth sits at a modest 1.3%. When compared to the previous three months, sales edged up by 1%. However, they remain slightly down by 0.2% when compared to the same three-month period in 2023. This suggests a fragile recovery, with pre-pandemic levels yet to be reached.
Market participants are anticipating a moderation in June, with forecasts predicting a 0.5% decline in month-over-month sales when the data is\ released at 6:00 AM GMT.
Major Earnings Releases:
- Sartorius
- AMERICAN EXPRESS
- Halliburton
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