Three main highlights in the markets last week:
News on Tuesday that President Trump had instructed the office of the United States Trade Representative to double the value of tariffs on Chinese goods to US$200bn China responded that "If the US loses its sense and publishes such a list, China would retaliate forcefully,".
In response, Asian equity markets experienced sharp falls. China’s Shanghai Composite amongst the hardest hit to be down -5% at one stage during the day. The Korean Index, the KOSPI closed -1.4% on the day trading to new lows for the year.
The second point to note last week was generally disappointing growth data outside of the US. Particularly from the Euro area although Friday’s rise in the June flash PMI survey has calmed nerves a little and puts the Euro area on track for GDP growth at 2.3%.
Finally, OPEC at its meeting in Vienna, announced an increase in production which was less than the market had hoped for. West Texas Crude Oil rallied from U.S.$65.54 a barrel to close on Friday at U.S. $68.58 per barrel.
For the week ahead: The list below outlines the highlights in a week with limited top-tier data releases.
Australia: Private sector credit (Friday). Interest there will be on the continued fall in loans to housing investors. Market expecting a +0.4% increase for May.
New Zealand: has trade data and business confidence (Wednesday), followed by RBNZ Thursday. The RBNZ is widely expected to leave the OCR at 1.75%. Keep in mind last week’s GDP of 0.5% QoQ missed the RBNZ's latest forecast (0.7%Q) which may result in a slightly more dovish tone in the accompanying statement.
China: China has final 1Q BoP (Friday).
Japan: has retail sales (Thursday) as well as Tokyo CPI. Unlikely to be a market mover for more than a few moments.
U.S. This week sees the release of a number of regional Fed surveys, durable goods, personal income and spending as well as PCE inflation (The Feds preferred measure of inflation). Personal income and spending (Fri) will be of interest given it will feed through into 2Q GDP estimates. Personal Income should rise about 0.4%, while strong retail sales point to a firm spending number of around 0.5%. All in this report should point to 2Q GDP growth of approximately 4%.
Fed speakers includes Bostic (voter Tuesday and Thursday), Kaplan (non-voter Tuesday), Rosengren (non-voter) and Bullard (non-voter and noted dove).
Canada: Band of Canada’s Poloz speaks on Thursday morning AEDT time. The market will be watching to see if he sticks to the hawkish script from from the May 30 statement or backs off a bit due to trade concerns and the recent soft data.
GDP (Fri): The market looking for slightly below-trend 0.1% m/m gain in April GDP, after increases of 0.3% and 0.4% in March and February, respectively.
In the Euro area: The big one will be the German IFO business survey (Monday) with the market looking for the Business Climate number to drop to 101.7 from 102.20 in May. The French INSEE consumer confidence may also be watched given recent dramas in Italy.
UK: In the UK the focus will be on the BoE financial stability report, and BOE Carney is due to speak Wednesday. Then the EU summit (Thursday and Friday) and Brexit negotiation developments.
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