Last week, the international market was volatile. The US Consumer Price Index (CPI) unexpectedly fell month on month in June, and Federal Reserve Chairman Powell hinted that interest rate cuts do not need to wait until inflation drops to 2%.
In terms of the market, the US stock market continued its upward trend, with the Dow Jones Industrial Average rising 1.59%, the Nasdaq rising 0.25%, and the S&P 500 index rising 0.87%. The three major European stock indexes performed well, with the FTSE 100 index in the UK rising 0.60%, the DAX 30 index in Germany rising 1.48%, and the CAC 40 index in France rising 0.63%.
There are many highlights this week. The June retail monthly rate in the United States will become an important barometer of the economy, and the focus of the European Central Bank's interest rate meeting will be the timing of the next interest rate cut. The latest inflation data from the eurozone, the United Kingdom, Canada, and Japan are expected to have a significant impact on subsequent policy decisions. The US stock earnings season has begun, and Netflix has become the first star technology stock to announce its performance.
In addition, according to CCTV News, on the afternoon of the 13th local time, when former US President Trump gave a speech at a campaign rally in Pennsylvania, gunshots rang out at the scene. The video shows that Trump had blood in his ears and face when he left. Butler County District Prosecutor Richard Goldinger stated that one suspect involved in the shooting has died, another participant in the rally has died, and a second participant who was injured at the scene is currently in a "critical condition". The statement released by the Trump campaign team afterwards shows that he will continue to attend the Republican convention starting on the 15th local time in Milwaukee, Wisconsin.
US retail may continue to be under pressure
Last week, Federal Reserve Chairman Powell testified at a congressional hearing on the semi annual monetary policy report. He said that inflation has been improving in recent months, and more good data will strengthen the reasons for relaxing monetary policy. However, Powell also emphasized that he is not ready to announce a victory over inflation.
This week, several Federal Reserve officials will deliver routine speeches, focusing on statements related to monetary policy and economic prospects. The Federal Reserve's economic condition brown book will be released, keeping an eye on recent trends in the business sector, employment, and prices.
In terms of data, the monthly retail sales rate in June became the focus. As an important component of consumer spending, after only growing by 0.1% in May, institutions expect it to remain unchanged in June, which may further strengthen the trend of economic slowdown.
In addition, investors will closely monitor the manufacturing index of the New York Fed and Philadelphia Fed in July, the number of unemployment claims, and the monthly rates of construction permits, new housing starts, and industrial output in June, in order to more comprehensively assess the changes in consumer demand at the beginning of the second half of the year under the influence of restrictive monetary policies.
The earnings season will continue. This week's noteworthy companies include Goldman Sachs, Morgan Stanley, Bank of America, BlackRock, United Health, American Express, Netflix, and others.
Crude oil and gold
International oil prices have fallen for the first time in nearly five weeks, as the market balances the latest US inflation data, supply outlook, and latest demand signs, and remains cautiously optimistic about the ceasefire agreement in Gaza. WTI crude oil fell 1.14% to $82.21 per barrel in the near month contract week, while Brent crude oil fell 1.74% to $85.03 per barrel in the near month contract week.
The International Energy Agency (IEA) has lowered its forecast for next year's oil demand growth, raised its supply expectations, and strengthened its outlook for a severe oil oversupply by 2030. In contrast, OPEC maintains an optimistic outlook for demand growth.
Manish Raj, Managing Director of energy company Velandra Energy Partners, believes that although underlying sentiment remains positive, investors are seeking more data to confirm the macro situation. Under the dual support of easing inflation and tightening inventory, the rebound allows investors to patiently wait for new developments before taking the next step, "he said.
International gold prices rose for the third consecutive week, hitting a seven week high during trading, as lower than expected US inflation data boosted bets on a rate cut in September. The COMEX gold futures contract for July delivery on the New York Mercantile Exchange rose 1.07% for the week to $2414.00 per ounce.
Ricardo Evangelista, senior analyst at ActivTrades, a London based spread contract economist, believes that the Federal Reserve is moving towards an increasingly moderate stance. "It can be seen that Powell acknowledges that consumer prices are moving in the right direction, and inflation rates do not need to reach 2% to start cutting rates," he said.
Jim Wyckoff, Senior Market Analyst at Kitco Metals, said, "Although the Producer Price Index (PPI) is hotter than expected, this has added some selling pressure. However, from the reactions of the stock and bond markets, the data has not really eased the impact of CPI data. Therefore, the possibility of interest rate cuts this year is high, possibly as early as September
The European Central Bank's decision is coming
This week, the European Central Bank will hold an interest rate meeting. After announcing a 25 basis point interest rate cut last month, the market generally expects the meeting to remain unchanged.
Since the last meeting, inflationary pressures in the eurozone have slightly eased, with signs that although wage growth remains high, wage pressures are cooling down.
Therefore, there is a basic consensus within the European Central Bank to cut interest rates again within the year and consider reassessing the risks in September. At this meeting, the outside world will pay attention to whether European Central Bank President Lagarde will provide more clues or guidance.
In terms of data, the Eurozone and Germany's July ZEW economic sentiment survey, as well as the Eurozone's June CPI final value, will receive the most attention from investors.
Despite the overall inflation rate dropping to the Bank of England's target of 2% in June, the service sector inflation rate remained as high as 5.7%. The Chief Economist of the Bank of England, Hew Pill, emphasized last week that the central bank may lower its key interest rate at some point in the future, but recent data suggests that inflation rates may remain high for longer than expected. The rise in service prices, coupled with the rapid increase in wages, is a worrying sign of potential inflation.
Interest rate futures show that investors are highly divided on whether to cut interest rates in August. The latest news about inflation, employment, and retail sales in the coming week may be decisive. Any further slowdown in core CPI, service sector CPI, and wage growth could push the balance of interest rate cuts to next month.
This week's highlights