Week Ahead: NFP in focus as US lockdowns threaten recovery hopes

Week Ahead

Earnings season is winding down, but the Q3 report from Walt Disney will be closely watched this week. On an economic front, the RBA and BoE both hold monetary policy meetings, and Friday’s US nonfarm payrolls report threatens to keep markets volatile right up until the weekend.

PMIs on tap from Markit, Caixin, ISM

A slew of PMIs this week will provide more information on the state of the global economy. Finalised manufacturing and services PMIs are due for the Eurozone, UK, and US. The closely-watched China Caixin manufacturing PMI arrives first on Monday, with the services PMI following during Wednesday’s Asian session.

Also in the docket this week are the US ISM manufacturing and nonmanufacturing indices. The nonmanufacturing index is expected to pull back slightly after leaping nearly 12 points in the June reading, while still remaining firmly in growth territory.

Reserve Bank of Australia meeting – recent deflation to prompt response?

The Reserve Bank of Australia meets against a backdrop of surging coronavirus cases both globally and domestically.

Fresh lockdowns threaten the economic reopening and recent CPI data revealed that prices fell on an annual basis for the first time since 1997 in Q2, with the quarter also posting its biggest drop in the consumer price index on record.

Markets are likely looking for policymakers to do more to stimulate inflation. With interest rates already effectively zero, and no appetite to go lower, the focus will be on whether the RBA considers other forms of stimulus necessary now or in the near-term.

Walt Disney earnings

Investors will be watching three key factors in Disney’s upcoming Q3 earnings report, which is due after the close on August 4th. The biggest portion of the company’s revenue comes from its theme parks – some of these have reopened, but others have remained closed even past their original reopen dates thanks to surging case numbers.

Delays not only to the release, but also the production, of blockbuster movies will impact both the bottom line and guidance.

Disney+ might prove a silver lining – lockdown has seen a surge in subscriber numbers for rival Netflix, and investors will be watching the see if Disney has enjoyed a similar boom.

Bank of England rate decision, Inflation Report

The Bank of England’s Monetary Policy Committee will announce its latest monetary policy decision on Thursday.

Chief economist Andy Haldane recently told the Treasury Select Committee that he believes the UK economy has recovered “roughly half” of the huge slump seen in March and April, but warned that unemployment could hit highs not seen since the mid-80s.

Haldane listed several policies the Bank of England could employ if policymakers deem it necessary – any talk of negative interest rates would be the most headline-grabbing, but the MPC could also consider additional QE, credit easing, or forward guidance.

No changes to interest rates or QE is currently expected. The BoE will also publish the latest Inflation Report on Thursday.

Nonfarm payrolls – fresh lockdown measures to slow labour market recovery?

July’s US nonfarm payrolls report is due for release on Friday. The past two readings have shown a huge rebound after the -20 million collapse seen in April, with 2.7 million jobs added in May and 4.8 million in June. Economists expect to see another 2.2 million jobs were created in July.

There is still a long way to go until the US is back to pre-Covid levels of employment, and surging case numbers and fresh restrictions on businesses in many states could weigh on future jobs gains.

Highlights on XRay this Week 

Read the full schedule of financial market analysis and training.

07.15 UTC Daily European Morning Call
12.00 UTC 03-Aug Master the Markets with Andrew Barnett
From 15.30 UTC 04-Aug Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 06-Aug Election2020 Weekly
12.00 UTC 07-Aug Marketsx Platform Walkthrough

Top Earnings Reports this Week

Here are some of the biggest earnings reports scheduled for this week:

05.30 UTC 04-Aug Bayer – Q2
04-Aug Sony – Q1
Pre-Market (UK) 04-Aug BP – Q2
After-Market 04-Aug Walt Disney – Q3
05.00 UTC 05-Aug Allianz – Q2
Pre-Market 05-Aug Regeneron
06.00 UTC 06-Aug Glencore – Q2
06-Aug Adidas – Q2
Pre-Market 06-Aug Siemens – Q3
06-Aug Uber – Q2

Key Events this Week

Watch out for the biggest events on the economic calendar this week:

01.45 UTC 03-Aug China Caixin Manufacturing PMI
07.15 UTC – 08.00 UTC 03-Aug Finalised Eurozone Manufacturing PMIs
08.30 UTC 03-Aug Finalised UK Manufacturing PMI
14.00 UTC 03-Aug US ISM Manufacturing PMI
04.30 UTC 04-Aug RBA Interest Rate Decision
22.45 UTC 04-Aug New Zealand Quarterly Employment Change / Jobless Rate
01.45 UTC 05-Aug China Caixin Services PMI
07.15 UTC – 08.00 UTC 05-Aug Finalised Eurozone Services PMIs
08.30 UTC 05-Aug Finalised UK Services PMI
14.00 UTC 05-Aug US ISM Nonmanufacturing PMI
14.30 UTC 05-Aug US EIA Crude Oil Inventories
11.00 UTC 06-Aug Bank of England Rate Decision, Monetary Policy Report
12.30 UTC 06-Aug US Weekly Jobless Claims
14.30 UTC 06-Aug US Natural Gas Storage
01.30 UTC 07-Aug RBA Monetary Policy Statement
06.00 UTC 07-Aug Germany Industrial Production / Trade Balance
12.30 UTC 07-Aug US Nonfarm Payrolls, Average Earnings, Jobless Rate