What to watch around the world next week: Inflation, financial reports and Middle East risks "three encounters", the S&P reaches a new high
Financial Associated Press, July 12 (Editor Shi Zhengcheng) Next week, the global market will usher in a busy state of economic data, the opening of a new round of earnings season, and geopolitical events. In addition, as the S&P 500 index continued its weekly "two consecutive positives" this week, the index closed at 7575.39 points, which is only "on the threshold" of the previous high of 7620.90 points and the historical closing high of 7609.78 points. Next week, there will be a large number of opportunities that can provide help, or make this round of impact in vain.
Financial Associated Press, July 12 (Editor Shi Zhengcheng) Next week, the global market will usher in a busy state of economic data, the opening of a new round of earnings season, and geopolitical events. In addition, as the S&P 500 index continued its weekly "two consecutive positives" this week, the index closed at 7575.39 points, which is only "on the threshold" of the previous high of 7620.90 points and the historical closing high of 7609.78 points. Next week, there will be a large number of opportunities that can provide help, or make this round of impact in vain. (Daily chart of S&P 500 Index, source: TradingView) First, U.S. inflation data for June will be released on Tuesday. On the same day, the new chairman of the Federal Reserve, Kevin Warsh, will appear at a congressional hearing. In the Federal Reserve's semi-annual monetary policy report released on Friday, the agency significantly increased its emphasis on maintaining "price stability." Affected by the situation in the Middle East, the U.S. CPI has surged since March. After the inflation rate "broke 4" in May, it has reached a level not seen since 2023. (U.S. CPI annual rate, source: tradingeconomics) LSEG data shows that the U.S. money market has fully priced in the possibility of a 25 basis point interest rate hike in December and is highly anticipating the possibility of a rate hike in October. If inflation data slows significantly, it could cause investors to recalibrate their expectations for interest rate hikes. In addition to CPI, U.S. data to be released next week include June PPI and retail sales data, as well as the University of Michigan's July consumer expectations survey. Outside the United States, the central banks of Canada and South Korea will hold interest rate meetings next week, in which the "semiconductor frenzy" may trigger the Bank of Korea to enter a gradual interest rate hike cycle. For investors in Chinese assets, next week is also an important release window for Chinese economic data. Next week is also the opening moment of the second quarter earnings season for U.S. stocks. Reports from JPMorgan Chase and other "Six Major Wall Street Banks" will provide the latest reference for the current status of the U.S. economy. For technology stocks that have been fiercely "united" this year, ASML and TSMC's latest financial reports are expected to show that "the story of AI is not yet finished." Another feature of the upcoming earnings season is that the market has given quite high growth expectations. According to data from LSEG IBES, second-quarter earnings of S&P 500 index constituents are expected to increase by 23.7% compared with the same period last year. In terms of other companies' schedules, General Fusion completed its "backdoor listing" last Friday and plans to start trading on Nasdaq on Monday. Finally, the situation in the Middle East remains an important and uncontrollable off-site factor. This week, as conflicts between the United States and Iran escalated due to different interpretations of the memorandum of understanding on "who will control access to the Strait of Hormuz," a new round of military conflict put the hope of a rapid recovery in the energy market at risk. David Godwin, who served as special envoy for international energy affairs under Obama, explained: "The fundamental problem is that the MOU does not agree on the management of ship traffic through the Strait of Hormuz. It essentially postpones the issue...We are back to the situation before the MOU was signed, where Iran is threatening the passage of any non-Iranian ships without Iranian approval, and the United States cannot militarily open the Strait of Hormuz to free navigation." Godwin said oil prices could rise further if the U.S. goes back to the old path of imposing blockades. Because this will take 1.5 million barrels per day of Iranian exports off the market. Overview of important financial events next week (Beijing time) Monday (July 13): OPEC releases monthly crude oil market report Tuesday (July 14): U.S. CPI in June and Federal Reserve Chairman Warsh attended the House of Representatives hearing Wednesday (July 15): The State Council Information Office held a press conference on the operation of the national economy, the U.S. PPI in June, the Bank of Canada announced its interest rate resolution and monetary policy report, and Federal Reserve Chairman Warsh attended a Senate hearing. Thursday (July 16): The Federal Reserve releases the Beige Book of Economic Conditions, the Bank of Korea announces its interest rate decision, and U.S. retail sales data for June Friday (July 17): South Korean stock market closed, Eurozone CPI in June, University of Michigan Consumer Confidence Index in the United States in July (