© Reuters. FILE PHOTO: Flowers grow outside the Bank of England in the City of London, Britain, July 30, 2023. REUTERS/Hollie Adams/File Photo
A look at the day ahead in European and global markets from Brigid Riley
The Wednesday “hump” may have passed, but the week is far from over as we head into this data-heavy day, with a Bank of England rate decision and Apple (NASDAQ:) earnings topping the schedule.
The BOE is leaning toward a 25 basis point hike after the inflation gods took some pity on the UK last month. CPI now sits at a balmy 7.9%, easing off 8.7% in May.
So will the UK join the United States and others in seeing some sustained inflation relief? That remains to be seen. Although the latest CPI news garnered some sighs of relief, the BOE may still end up the last of its peer central banks battling in this global inflation brawl.
Fed Chair Jerome Powell isn’t ready to call the job done just yet, but that hasn’t stopped markets from pricing in an end to the Fed’s rate hike campaign. The ECB appears positioned for a pause in September. Both central banks raised rates another quarter of a percentage point last month.
With the BOE drifting away from its peers, inflation still uncomfortably high, and labour and wage data coming in mixed, markets will be a little wary of another move like the half-point curve ball the central bank threw at their last meeting.
Investors and economists will be sure to inspect the BOE’s growth and inflation forecasts for indications of just how sticky the central bank thinks inflation has become.
Not to be overshadowed by monetary policy, earnings reports roar back into focus on Thursday with Apple at the forefront. The iPhone maker follows a parade of big tech firms to announce earnings, although the company might have to wait for hype over its newest model — and any signs it will enter the AI world — to move consumers or give investors cheer.
Amazon.com (NASDAQ:) is also sure to be on the market’s watchlist on Thursday, while Moderna (NASDAQ:) looks poised to take a substantial hit as demand for COVID-19 vaccines dampens.
China kicks off a long line of PMI releases today with better-than-expected services activity, giving markets a bit of good news after disappointing data on Monday.
Chinese real estate, on the other hand, was looking gloomy after shares of Evergrande’s property services arm re-opened following a 16-month halt with a steep drop of nearly 50%. Hong Kong’s property subindex in particular felt the pain, slumping more than 1%.
In Japan, the stock market continued to feel the drag from U.S. chip firms on Thursday morning, with the seeing broad-based losses.
Key developments that could influence markets on Thursday:
– BOE monetary policy decision, UK July reserves balance
– Apple, Amazon, Block, Booking (NASDAQ:) Holding, Airbnb, Expedia (NASDAQ:), Stryker (NYSE:), Cigna (NYSE:); Rolls-Royce (OTC:), Infineon (OTC:), Adidas AG (ETR:), BMW
– Euro zone June PPI
– Germany June trade balance
– France June budget balance
– U.S. initial jobless claims, Q2 productivity and labour costs, June factory orders
– U.S., Italy, France, Sweden, Spain, France, Germany, Euro Zone, UK July service PMI, Fed’s Barkin speaks