Weekly Outlook, 1-5 July

Central banks and the labor market!

July will start with a busy week. The central bank in Australia, the United Kingdom, Brazil, and some other developing countries will have monetary policy meetings, while in the US, eyes will be on Nonfarm Payrolls, which will be very important to guess the FED rate hike decision level. Besides them, we have many data from other economies that must be in the spotlight in line with Earnings reports.

US ISM Manufacturing - Monday

ISM manufacturing report covers different sections, including the labor market, New Orders, and Price paid. In the June report, all sections experienced significant declines. This Monday, we will be primarily interested in employment numbers to see if it can climb back into expansion or not. Also, new orders will tell us about our expectations for the upcoming months. Expected data can help the USD downtrend, to keep going a bit lower.

Reserve Bank of Australia - Tuesday

RBA is due to start the new round of rate hikes in August. We expect the RBA to deliver another 50 bps rate hike to get to 1.85% at its August monetary policy meeting. A 6.1% year-over-year inflation in Q2 is enough to convince the bank officials to another increase. The Australian economy was steadily increasing; therefore, it must be resilient enough to withstand consecutive 50 bps rate hikes. Expected data can help the Aussie against its crosses.

Bank of England - Thursday

Inflation is at its 40-year high and is still expected to increase a little bit more while there are signs that household incomes are being squeezed. For this meeting, despite the UK economy's weakness that still expected to continue, another 25 bps rate hike is supposed to be done. These policies must put more pressure on the UK stock markets and limit its latest slow increase.

US Employment numbers - Friday

FED insists that the US economy is not in recession, and its most vital argument is the labor market. This week's NFP numbers will be very important for the US Federal Reserve. For now, the overall expectation is to see a little bit weakness in the numbers, as lately we could see the consumers are spending less than in earlier months. And in the upcoming months, the market is supposed to see more weakness in hiring and pressure on the economy, which must have negative reaction in the stock markets.

Earnings report

So far, more than 75% of reported companies in the SP500 list could beat the expectations. For this week, HSB Bank and Baidu will report on Monday. AMD, SP Global, Caterpillar, PayPal, Starbucks, Marriot Hotels, and Uber will have earnings call on Tuesday. Wednesday should watch the Booking.come and Moderna earnings. And Thursday, Elli Lili, Toyota, and Airbnb will be in the spotlight.