As prime minister Boris Johnson “squeezes the break pedal” on some UK businesses reopening, and markets gear up for another uncertain week, investors will be looking to key central bank announcements from the Bank of England (BOE) and jobs data from the US for clarity.
Fears of a second wave of the coronavirus have plagued markets in recent weeks, and steps to mitigate risk, from both policy makers and officials will be closely watched.
The market will also be watching for developments to stories that broke over the weekend:
Key company results to watch this week come from:
HSBC — Interim results (Monday)
BP — Q2 (Tuesday)
ITV — Interim results (Thursday)
UK — BOE announcements, house price index, key policy updates
The BOE rate decision will be one to watch this week, as Andrew Bailey and the monetary policy committee continue to grapple with the economic effects of the coronavirus, and a potential second wave.
Economists polled by Reuters last week on average predicted the BOE would keep the rate at its record low of 0.1% this year and next, but that policymakers would announce £70bn ($91.6bn) of asset purchases in November or December.
Other UK developments to watch for are revisions to the rolling list of travel restrictions, and whether key holiday destinations in Europe will be exempted from quarantine.
Halifax’s house price index is also due, and is likely to show further weakness in the housing market, despite stamp duty rollbacks.
This week, Rishi Sunak’s “eat out to help out” scheme comes into effect, offering customers money back on their meal if they dine out in participating restaurants on Mondays, Tuesdays or Wednesdays throughout August. It will give 50% off food and soft drinks, with a maximum discount of £10.
Europe — PMIs and retail sales
Investors will be watching for any significant fallout from key manufacturing data released this week. Markit PMIs across Europe will show how output fared in July, with releases from Italy, France, Germany, Europe and the UK on Monday.
The PMIs are forward-looking indicators meant to signal the direction of activity in the broad manufacturing and services sectors and are based on sub-indices.
Eurozone retail sales for June released on Wednesday will also be a good temperature gauge on how quickly economies are rebounding. “A sharp rise is still to be expected before things start to level off,” say analysts at ING.
US — jobs and other economic indicators
Eyes will be on US jobs numbers again, as the report details payrolls for the week of 12 July.
Economists expect to see an increase following rising employment in the second half of June and beginning of July — most job losses in July fell in the second half of the month. Predicting the numbers, economists at ING say: “We are more cautious than the market though and look for a figure closer to 750,000 versus the current consensus of 1.5 million.”
The market will also be looking to see what will happen as the $600 a week unemployment benefit ends. The payout has boosted more than 30 million people and is due to be replaced with something a lot smaller.
Markit PMIs are also on the slate for the US on Monday.