Top 5 Things to Watch in Markets in the Week Ahead

 

 Noreen Burke

Investing.com — Investors are going to be looking to the Federal Reserve System minutes and therefore the latest U.S. retail sales data to offer direction to markets within the week ahead, while a flurry of retail earnings also will keep the main target on consumer strength. Chinese data will provides a snapshot of how the economy is faring because the delta variant of the coronavirus bears down and New Zealand looks set to be one among the primary of the world’s advanced economies to boost interest rates within the pandemic era. Here’s what you would like to understand to start out your week.

Federal Reserve minutes

On Wednesday the Fed releases the minutes of its July meeting, which can be scrutinized for policymakers’ views on when to start out scaling back the Fed’s monthly bond purchases, also as their outlook on the economy.

Last month Fed officials declared the recovery intact despite the increase of the delta variant and since then the stronger-than-forecast July jobs report prompted several policymakers to suggest the tapering of asset purchases might start sooner instead of later.

“I know some Fed officials are pushing for it to happen at the September meeting, but that’s impossible ,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities.

“November is feasible if subsequent two employment reports are strong enough, but the chances favor December because the time of the formal announcement.”

U.S. retail sales

The U.S. economy is growing strongly but the spread of the delta variant remains a headwind so upcoming economic data will provide a fresh insight into consumer demand after a report on Friday showing that consumer confidence fell to its lowest level during a decade.

Consumer spending accounts for around 70% of U.S. economic output.

Investors are going to be eyeing Tuesday’s U.S. retail sales data to ascertain whether the shift in spending from goods to travel, leisure and services, which aren’t reflected in retail sales, continued in July.

Economists are forecasting a 0.2% fall, amid another expected steep decline in auto sales.

Other reports on the slate include industrial production on Tuesday and initial jobless claims Thursday also because the Fed’s New York manufacturing index on Monday and therefore the Philadelphia Fed manufacturing survey on Thursday.

Retail earnings

Retail earnings could also shed more light on the strength of consumer demand within the coming week, with several large retailers including Walmart (NYSE:WMT), Target (NYSE:TGT), Macy’s (NYSE:M), Lowe’s (NYSE:LOW) and residential Depot (NYSE:HD) reporting quarterly results.

Ross Stores (NASDAQ:ROST), TJX (NYSE:TJX) and Bath & Body Works (NYSE:BBWI) also will be reporting.

In particular, investors are going to be on the lookout for insights on how retailers are handling inflation and market shortages.

The earnings results come at the top of a stellar U.S. second-quarter results season. S&P 500 earnings are expected to possess jumped 93.1%, well above prior expectations of 65.4%, consistent with Refinitiv IBES.

China recovery

China, which is handling its largest outbreak of Covid since the first days of the pandemic, has imposed mass testing and travel restrictions, crimping economic activity.

Several Wall Street investment banks, including Goldman Sachs last week cut their China growth forecasts for the remainder of the year.

Data on retail sales, industrial production and glued asset investment all due out on Monday will show how the economy fared in July. The numbers are expected to slow, adding to concerns that the recovery within the world’s second-largest economy is losing momentum.

The recovery from the pandemic has been uneven in China, with export demand driving most economic process , while domestic demand has returned more slowly.

New Zealand rate hike

The Federal Reserve Bank of latest Zealand bank meets on Wednesday and appears set to become the primary major economy to boost interest rates since the pandemic hit as its red-hot economic recovery continues.

Super-strong jobs data have cemented expectations of a hike, which might be New Zealand’s first since mid-2014. this is often in sharp contrast to 2020, when rates were slashed 75 basis points to 0.25% and a move below zero became a true possibility.