Weekly Market Outlook
This week’s economic calendar is rich in key economic data figures, which promises to keep market volatility high. We kick off on Tuesday with the UK releasing its GDP numbers for the first quarter. On Wednesday, Germany is scheduled to report the closely watched unemployment data for its economy. On the same day, a whole string of key manufacturing PMIs will give a sign of where global business activity stands at the moment. The US Fed minutes will be released right in the middle of the week too and will provide an important insight about the discussions central bankers have had during their last interest rate meeting. The most important data figures not only for the week but for the entire month are due to be released on Thursday, so watch out for the US June Employment report! Finally, we close the week on Friday with the global services PMIs.
Reserve Bank of Australia Rate Meeting (Tuesday)
Given that the unemployment rate has spiked by more than 1% since RBA’s last meeting, while interest rates are at record lows, further quantitative easing remains very probable. There has been a slight pick up in Australian economy, and a new employment programme is on the Australian government’s agenda. In spite of that, a rapid economic improvement remains highly unlikely.
UK Economic Statement (Wednesday)
On Wednesday, Rishi Sunak, UK chancellor of the exchequer, is expected to reveal more details of his roadmap for steering the country’s economy through the crisis caused by the coronavirus. That will come following PM Boris Johnson’s promise of large scale investments in infrastructure. VAT and other tax cuts are also in the cards, as the country needs substantial fiscal support to aid its recovery. Chancellor Sunak is likely to address the severe gaps in the construction industry by offering wage subsidies or tax breaks as incentives for companies to start employing workers.
Another expectation is linked to the furlough scheme, where he could be strongly urged to offer more flexibility. Different sectors in the country continue having a hard period with shrinking revenue. There are growing apprehensions that by the autumn the industry will be hit by a massive wave of job losses.
Rolls-Royce Q2 Results (Thursday)
Rolls-Royce has been in a dire period in the past few months, with its share price hovering around a multi-year low. As customers are delaying orders for aircraft or canceling them, the Rolls-Royce order book has suffered a severe blow. Furthermore, shrinking in air travel and the imposition of diverse travel bans have led to the diminishing of almost half of Rolls-Royce’s projected revenue. The company has announced its plans for reducing its workforce of 52,000 by 9,000, mostly civil division workers.
Weekly US Jobless Claims (Thursday)
With infection rates on the rise, analysts see jobless claims spiking up again. In the current situation it could be reasonably expected that the tendency of returning furloughed workers would either slow down, or stop. Behemoth companies like Apple, with its re-closing of 77 stores, as well as diverse bars and restaurants, have all been hit hard by the soaring coronavirus cases.
Canada June Employment Report (Friday)
The large scale job losses of 3 million in March and April were compensated only to a certain extent by the surprising rise by 289,000, due to workers returning from furlough. Not a large rebound like in the US, but hope is maintained that Canadian economy has started to gain traction. May saw a rise in the unemployment rate to 13.7%, while the June figure is seen falling to 12.5%.