Weekly Market Outlook

This week is not as rich in economic and financial data releases as some of the previous ones. We start with Germany’s second quarter GDP on Tuesday. On Thursday, we have a few highlights which promise to keep investors on a careful watch. These comprise the US Q2 GDP, the US personal spending, the US economic policy symposium and Hewlett-Packard’s Q3 earnings report.

Germany Q2 GDP (Tuesday)

The Q2 data will give a clear picture of the German economy’s performance in the period of lockdown, and it is not expected to offer surprises. The expectations are for a -10.1% contraction. The environment of rising virus cases and the soaring concerns about the strike of a second wave make it difficult to predict how businesses in Germany will look at the long-term recovery prospects.

Hewlett-Packard Q3 Results (Thursday)

The need for millions of people to work from home during the prolonged coronavirus shutdown has sped up the demand for HP equipment. The company had a hard time adapting to supply, as Q2 numbers show, because there were hold-ups both in manufacturing and in supply chains. The company’s sales of notebooks and PCs were quite high. However, there was a difficult period for peripherals sales, especially in relation to printing, due to the massive number of office closures.
The Q2 revenue came out at $12.5bn, which was a slump from the 11.2% posted a year ago. In spite of that though, profits did not disappoint, reaching $0.51 per share. HP has currently retained a solid 21.8% share of the PC sales worldwide, yet cheaper and agile companies in the field are in the wake and causing pressure. The anticipated EPS for Q3 is $0.43 per share.

US Economic Policy Symposium (Thursday)

Initially scheduled to be held in Jackson Hole, Wyoming, now the symposium is to take place virtually. Markets will be focused on what measures the Federal Reserve intends to take should a second Covid-19 wave strike in the autumn. As Fed’s chairman Jerome Powell said at the recent Fed press conference, the central bank was in the position of a hostage, and another factor they looked forward to, was the introduction of a vaccine for the novel virus. The diverging views on fiscal policy aggravate the situation further. The truth is that for the time being, with the forthcoming November election, FOMC can do little to remedy the situation.

US Q2 GDP (Thursday)

The latest data for US GDP indicated an annual reduction of -32.9%. In the next few months, this figure is expected to undergo a serious revision. As for this week’s Q2 figures, the revision is to be along the same lines, and the prospect remains of the data being revised higher. The predominant share of the damage to the US economy was done in late March and April. May and June brought a massive rebound, so the latest figures are likely to be impacted as well, shooting up respectively.

US July Personal Spending (Thursday)

The recent data on US retail sales for July pointed to a slowdown in consumer spending, following two months of hefty gains. The personal spending figures on Thursday could point to a similar downward trend in personal spending, particularly factoring in the exhaustion of fiscal stimulus measures. In the event no further measures are offered, the slowdown could expand further in August. Analysts forecast personal spending to decline to 1.4% in July, following the solid 5.6% logged in the previous month.