Finance

Marketmind: Inflation spotting By Reuters

© Reuters. FILE PHOTO: Shoppers browse in a supermarket while wearing masks to help slow the spread of coronavirus disease (COVID-19) in north St. Louis, Missouri, U.S. April 4, 2020. REUTERS/Lawrence Bryant

A look at the day ahead from Saikat Chatterjee

Markets are awaiting one of this year’s most important U.S. data releases– inflation data for June. A yearly rise of 4.9% is likely, according to pollsters, but after two months of stronger-than-expected prints, risks may be to the upside. Anything north of 5.5% might fuel a market selloff, analysts reckon.

Investors will remember that following recent upside surprises, the Fed pivoted hawkish at its June policy meeting. But so far, market action doesn’t reveal much unease — MSCI’s global stock index scaled record highs earlier, while European and U.S. stock futures are flat to firmer.

There was reassuring data from China with export growth accelerating to 32.2% year-on-year. While import growth slowed, it too exceeded expectations.

U.S. second-quarter earnings also kick off in earnest later in the day, with JPMorgan (NYSE:) and Goldman Sachs (NYSE:) among the first to report. Investors will watch for elevated margin pressures from higher input costs though expectations are for companies’ earnings per share to rise 66%, IBES data from Refinitiv shows.

In corporate news, Swiss watchmaker Swatch returned to profit in the first six months of 2021 and sales jumped more than 50%, while Danish drugmaker Novo Nordisk (NYSE:) will acquire U.S. drug developer Prothena’s heart therapy, PRX004, in a deal worth up to $1.23 billion.

Finally, the renewed COVID-19 upsurge is in the background, with France pledging tougher restrictions for people who didn’t get vaccinated.

Graphic: US inflation – https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrzaewve/inflation.PNG

Day ahead:

-U.S June inflation data due at 1230 GMT.

-Bond auctions: U.S. 12-month and 30-year; Japan 20-year; Germany 2-year

-Federal Reserve events: Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren

-U.S. earnings: Pepsi, JP Morgan, Goldman

-European earnings: DNB, Nordic Semiconductor

-Bank of England has scrapped pandemic-era curbs on dividends from HSBC, Barclays (LON:) and other top lenders

-Alibaba Group and Chinese state-backed firms are exploring bids for a stake in Unisplendour,, a cloud computing infrastructure firm, for as much as $7.7 billion

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