(Reuters) – Central bank decisions in Britain, Switzerland and Norway are expected to provide more evidence that the global rate cutting dash is slowing to a crawl, while retail sales data from the United States and China will provide a consumer health check.
A supply crisis puts cocoa markets in the spotlight and Europe gears up for a summer of sports with the Euros 2024 tournament kicking off in Germany.
Here’s the lowdown on the week ahead in world markets from Lewis Krauskopf in New York, Rae Wee in Singapore, and Dhara Ranasinghe, Marc Jones and Karin Strohecker in London.
1/ BIG DAY OUT
Britain, Switzerland and Norway hold central bank meetings on Thursday.
The Bank of England will likely dash any hopes the ruling Conservative party had of a pre-July 4 election rate cut. Markets now expect easing later rather than sooner, pricing a roughly 40% chance of an August quarter point move and a 70% chance in September with pay and services inflation sticky.
The Swiss National Bank kicked of rate cuts in March. Another cut on Thursday is seen as 50-50 after steady March inflation. Norway, in no rush to cut rates with core inflation around 4%, releases new economic projections. Australia’s central bank meets on Tuesday and is not expected to ease for some time.
After racing to hike rates as inflation surged, a global move towards cuts is a slow crawl.
2/ SALES REPORT
Investors trying to get a handle on the strength of the U.S. economy – and the timing of Federal Reserve rate cuts which are now not expected before September – will dig into the June 18 monthly retail sales numbers.
Retail sales are expected to have risen 0.3% in May, according to a Reuters poll of economists, after they were unexpectedly flat in April.
Consumer spending is an area of focus for Wall Street as investors seek to gauge the impact of higher interest rates on the economy. Data earlier this month showed the U.S. economy created far more jobs than expected in May and annual wage growth picked up again.
However, recent data showed U.S. consumer prices were flat in May as cheaper gasoline and other goods offset higher costs for rental housing.
3/ FADING HOPES
Investors are sitting on the sidelines as they await a more robust recovery in China, particularly with the beleaguered property sector continuing to cast a dark cloud over the growth outlook.
Data on China’s home prices is due on Monday – the first such release after Beijing announced “historic” steps to stabilise the property market last month, though to limited effect so far. May industrial output, urban unemployment rate and retail sales data are all due too, with hopes the latter could point to a stronger uptick after April’s disappointment.
Still, recent data continues to underscore the need for further stimulus from policymakers with the loan prime rate decision due on Thursday.
Souring trade relations add to the woes, with Europe set to slap extra duties on imported Chinese electric cars.
4/ BITTER SWEET
Cocoa prices are back above the watershed $10,000 per metric ton and closing in on all-time highs as the chocolate industry’s supply crisis worsens amid global supply shortages due to adverse weather, chronic under-investment in cocoa farms and investor speculation.
Top producer Ivory Coast halted cocoa exports for June and forward sales for next season in recent days. Number two Ghana is looking to delay delivery of up to 350,000 tons of beans to next season due to poor crops.
Cocoa has more than doubled in price this year, and is now costlier than many metals. Chocolate producers are passing on the burden to consumers or tweaking their products. Fresh production from countries outside of Africa such as Brazil and Ecuador will take time to come to the market.
5/ KICK OFF
The UEFA European Football Championship kicks off later on Friday in Munich and with 24 teams playing 51 matches across 22 match-days, it won’t just be Cristiano Ronaldo, Kylian Mbappe and Harry Kane hoping to score big in Germany.
German beer halls and companies hope fans will drink more and buy a big TV. Berlin wants the tournament to give its lumbering economy the same kind of lift the sizzling 2006 World Cup did.
Kitmakers are pacing – almost two-thirds of the teams are sponsored by Nike and Adidas, including the two big favourites England and France as well as hosts Germany. France, Germany and England’s kit deals are worth over $150 million alone.
Here’s a few stats to consider: A whopping 330 million people watched the 2020 Italy and England final – well over double that watched the Super Bowl.
(Compiled by Karin Strohecker, Graphics by Sumanta Sen, Pasit Kongkunakornkul, Kripa Jayaram, Prinz Magtulis and Vineet Sachdev; Editing by Mark Potter)
