Inflation showed its teeth last week after a stronger-than-expected rise in the US and China CPI sparked policy tightening and fears of higher interest rates, driving global stocks into the red.
While stocks paired back losses after the volatile week, investors will continue to watch inflation this week as the impact of the re-elected global monetary stimulus mounts.
In the UK, things are slowly returning to normal. On Monday, England will enter the third phase of its roadmap with the reopening of restaurants, pubs, entertainment and international travel.
Even so, the pandemic is still the focus.
Prime Minister Boris Johnson warned during a news conference on Friday that the lifting of COVID restrictions could lead to “serious disruption” due to Indian exposure. Johnson also announced plans to speed up the vaccination program to curb its spread across the country.
Observe: what is inflation and why is it important?
UK: Lots of dates on the map for the FTSE and the pound sterling
It’s a big week in the UK with lots of dates.
First, Most companies are allowed to reopen on Monday in England, with the exception of those in high risk industries like night clubs. International trips are resumed under a traffic light system. Travelers returning from the “green list of countries” do not need to be quarantined on their return.
Unemployment claims and ILO unemployment figures will be released on Tuesday. Optimism has grown in recent weeks with the UK economy reopening with the expectation that millions will return to the workforce when the vacation program ends later this year.
A hot April inflation report is in the spotlight on Wednesday as concerns about higher prices mount.
“March headline CPI was 0.7% while core prices rose 1.1%. If last week’s US experience is any guide, we could be a big leap toward the bank on either number of England’s given target of seeing 2%, “said Micheal Hewson, chief market analyst for CMC Markets.
April retail sales data and May flash PMI are on schedule for Friday. Monthly retail sales are likely to decline, while Flash PMI estimates should remain robust.
April PMI data were positive, helped by the UK’s road to normal against a backdrop of businesses reporting higher demand for goods and services. Service activity hit a six and a half year high at 61, while manufacturing rose to 60.9 – an eight-month high.
Meanwhile, retail sales have been positive since the huge 8.2% drop in January as stores closed again after the third lockdown. They rebounded slightly in February, up 2.1% and again up 5.4% in March, boosted by gardening and home improvement centers with a 16% increase in household goods.
Key company results:
Vodafone (VOD.L) – Final (Tuesday)
Marstons (MARS.L) – six months (Wednesday)
Premier Foods (PFD.L.) – all year (Wednesday)
easyJet (EZJ.L) – six months (Thursday)
US: Fed minutes, consumer confidence and more inflation
The Dow (^ DJI) had a tumultuous week, falling to lows not seen since January a few days after hitting 35,000 for the first time, when inflation data rose 0.8% to hit an annual rate of 4.2% – more than double the Federal Reserve’s standard target of 2%.
Consumer confidence and new home sales will be released on Tuesday.
Investors will be excited to see the minutes of the final meeting of the US Federal Reserve, which will take place on Wednesday.
A number of numbers are due on Thursday. First, a second look at that Value of the gross domestic product (GDP) in the first quarter – most recently at an annual rate of 6.4%. Add to this the orders for durable goods, outstanding home sales, and the usual weekly unemployment claims.
The week ended on Friday with the core personal consumption expenditure (PCE) measure of inflation, goods balance, personal expenses, personal income, Chicago PMI and consumer sentiment data.
Eurozone: Lagarde speech, PMIs, CPI data
There are some economic releases and speeches from EU finance ministers and the ECB’s lagarde on the agenda to keep investors busy this week.
The region’s final consumer price index (CPI) for April is due on Wednesday.
Lagarde and ECB Council member Robert Holzmann and the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, will speak on Thursday at a conference organized by the Austrian National Bank on the subject of “Gender, Money and Finance”.
On Friday Italy and the European Commission Co-hosted the G-20 Global Health Summit in Rometo discuss the lessons of the COVID-19 pandemic.
Also on Friday the finance ministers and central bank governors of the euro area will hold an informal meeting. Another meeting of a larger group of EU finance ministers and central bank governors will take place on Saturday.
A variety of economic figures for the region will also be published on Friday. Flash PMI data for the two largest eurozone economies, Germany and France, should underperform.
The German purchasing managers’ index for the manufacturing sector for May should fall slightly from 66.2 in April to 66.0. The regional PMI is likely to slow from 62.9 to 62.3.
Watch: What UK Government COVID-19 Support Is Available?