Stock Market - The Week Ahead

BoE Meeting

The BoE will likely kill any dreams the ruling Conservative party had of a rate cut prior to the fourth of July election. The BoE will convene its monthly policy making meeting on Thursday. The markets are pricing in a 70% possibility of sticky pay and service inflation in September and a roughly 40% chance of a quarter point rise in August. As of right now, they expect the relaxation to occur later rather than sooner.

A day before the BoE meets, the UK will reveal its May inflation figures, and it is anticipated that the consumer price index will drop to the bank's 2% objective for the first time in over three years.

However, underlying inflation is anticipated to stay over 3%, and the BoE is anticipated to hold for the time being given the intensity of the election campaign.

US data

Tuesday's retail sales data for May will be eagerly watched by investors who are attempting to gauge the health of the US economy and the timing of the Federal Reserve's rate reduction, which are currently not anticipated before September.

Retail sales surprisingly remained steady in April, and economists anticipate a 0.3% increase.

Wall Street is concentrating on consumer spending as they try to determine how rising interest rates will affect the economy.

The Fed reaffirmed this week that before cutting borrowing prices, it must first see stronger signs of declining inflation.

China Data

This week, China is expected to disclose a tonne of economic data, which investors will be watching for indications that the recovery in the second-biggest economy in the world is picking up steam. This is especially important as the outlook is still clouded by the country's troubled real estate industry.

On Monday, China's house price data is expected to be released for the first time since Beijing announced "historic" actions to stabilise the real estate market last month, albeit the impact has been little thus far. Retail sales, the urban unemployment rate, and industrial production figures are all scheduled for May; it is hoped that the latter will indicate a more robust rebound following April's lacklustre performance.

Even yet, the latest data emphasises the necessity for more stimulus from decision-makers, with the loan prime rate announcement coming up on Thursday.

Eurozone

On Friday, the Eurozone will announce the most recent batch of purchasing manager indices for June. Market observers will be watching for indications that the bloc's economic recovery is picking up steam.

Speakers from the European Central Bank this week include Vice President Luis de Guindos on Tuesday and President Christine Lagarde and Chief Economist Philip Lane on Monday.

Lagarde simply stated that the ECB will meet its inflation objective in response to a question on the turbulence in the French financial markets on Friday.

Friday saw another severe sell-off on French stocks as investors reduced their holdings ahead of a snap election that might provide the extreme right a majority.

In the event that the far right wins the parliamentary election in the upcoming weeks, French Finance Minister Bruno Le Maire issued a warning that the second-biggest economy in the eurozone was vulnerable to a financial catastrophe.

(Sources: investing.com, reuters.com)