What will end up dominating trading this week – stimulus hopes or fears of a second wave of covid-19 cases?
US
The US finds itself at an interesting crossroads, at least from a trading perspective. The Dow Jones was dragged from its recent 27600-passing highs by renewed fears about the global economic downturn, and the increased likelihood of a second wave of coronavirus cases.
With Trump never really getting a handle of the pandemic domestically, multiple states are now reporting record numbers of new infections, at the same time as China put Beijing on lockdown due to a new outbreak in the capital.
Yet investors got to indulge in a bit of optimism with reports that the President is preparing a $1 trillion infrastructure spending plan, a project Trump has long wanted to push forward with (in an even greater $2 trillion form). Now he can claim he is revitalising the US economy as he tries to get the scheme over the line.
Since those initial reports, details have been thin on the ground. Ideally, then, this week will bring about a more substantial update on the likelihood of such a plan being implemented. Especially on the issue of funding, which has sank previous attempts at this kind of stimulus.
While investors keep an eye on both stimulus and second wave headlines, there’s plenty of data for the markets to process. Existing home sales are out on Monday, followed by the month’s flash manufacturing and services PMIs on Tuesday. The final first quarter GDP reading is then joined by durable goods orders and the usual unemployment claims on Thursday, with the core PCE price index, personal spending and revised consumer sentiment readings on Friday.
UK
The UK is facing a quiet week from a data perspective, which just the CBI industrial order expectations on Monday and, more importantly, June’s flash manufacturing and services PMIs on Tuesday.
The corporate calendar is slightly fuller, with Cranswick (LON:CWK) and Naked Wine reporting on Tuesday, Stagecoach (LON:SGC) and Premier Foods (LON:PFD) on Wednesday, and Dixons Carphone (LON:DC) (LON:DC) and Mitie Group (LON:MTO) on Thursday.
The biggie then comes on Friday, as Tesco (LON:TSCO) posts its first quarter trading statement. Now that lockdown has been normalised, and somewhat eased, it will be interesting to see how the supermarket’s performance holds up to the same period last year.
Eurozone
As for the Eurozone, there’s the latest consumer confidence figure on Monday, the French, German and region-wide flash manufacturing and services PMIs on Tuesday, the German Ifo business climate reading on Wednesday, and the M3 money supply numbers on Friday.
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