Investing.com - Worries over mounting trade tensions look set to dominate market sentiment this week after U.S. President Donald Trump raised the stakes in the Sino- U.S. trade war and Beijing pledged to retaliate.
Trade data due out from China on Thursday will be closely watched for signs of the impact on the economy. Investors will also be looking ahead to a fresh round of central bank decisions, following last week’s Federal Reserve rate cut. Fed speakers will also be in focus, as investors try to gauge the future path of monetary policy. Economic data and earnings also feature on this week’s calendar.
Here’s what you need to know to start your week.
- Escalated trade tensions
Global stock and commodity markets dived deep into the red after Trump abruptly decided on Thursday to slap 10% tariffs $300 billion in Chinese imports, stunning investors and ending a month-long trade truce. China vowed on Friday to fight back.
Investors will be closely watching Chinese data on inflation and trade this week for an update on the health of the world’s number two economy.
Trade data due out on Thursday is likely to reinforce a trend of declining exports and imports, with exports expected to fall 2.2% year-on-year in July, while imports are expected to show a drop of 7.6%.
- Central banks
The central banks of Norway, New Zealand, Australia, India, Philippines and Thailand are all to hold interest rate meetings, with investors watching to see if they follow suit after the Fed’s first rate cut in more than a decade last week.
New Zealand is expected to trim another 25 basis points off its 1.50% main rate and there are outside bets that Australia could even make it three cuts in row having already dropped borrowing costs down to 1%.
India is expected to make its fourth cut of the year too as growth continues to slow there and while Thailand is not expected to move the strength of the baht is clearly causing worries again.
Then there is the outlier Norway. The issue there is whether or not it sets up a September rate hike. It has been flirting with the idea for months but it might decide that now might not be the best time to do it. If that's the case it will have to massage its message accordingly.
- Fed speak
St. Louis Fed President James Bullard is due to speak on the economy and monetary policy in Washington on Tuesday, while Chicago Fed President Charles Evans is due to deliver remarks the following day.
The U.S. economic data calendar is pretty light, but Monday’s service sector data will give investors some insight into whether the slowdown affecting the manufacturing sector is spreading.
- European data
It will be busy week in the Eurozone economic calendar with updated euro zone July services PMIs on Monday and German industrial production on Tuesday, which will help investors gauge the strength of the euro area’s largest economy at the end of the second quarter.
In the U.K., data on Friday is expected to show that economic growth stalled in the second quarter. Economists predict 0.1% growth rate month-on-month and 1.4% on a year earlier. Industrial output is forecast to have shrunk, as is manufacturing.
On Monday, the all-important U.K. services PMI is published for July, with economists forecasting a reading of 50.4, barely above the line of 50 that separates growth from contraction.
- Earnings set to slow
The deluge of earnings reports looks set to slow this week with around 62 companies on the S&P 500 scheduled to report.
Investors will parse earnings from Walt Disney (NYSE:DIS), CBS (NYSE:CBS) and Viacom (NASDAQ:VIA) amid a rising wave of competition in video streaming against market leader Netflix (NASDAQ:NFLX). The results could spark volatility in the so-called communication services sector, which has outperformed since it was overhauled last year.
--Reuters contributed to this report