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Economic Calendar - Top 5 Things To Watch This Week

Published 12/08/2018, 11:46
Updated 12/08/2018, 12:12
© Reuters.  Top 5 things to watch this week in financial markets

Investing.com - Investors will stay focused on Turkey's deepening currency crisis and the fallout across global markets in week ahead to see if any more news materializes after Washington's latest sanctions on Ankara battered the lira and triggered a move out of riskier assets.

In addition, market focus will stay attuned to the next potential steps in the tit-for-tat trade dispute between the U.S. and China.

U.S.-Sino trade-war fears have been simmering for months, keeping market gains in check with investors jittery over the prospects of further escalation in tensions between the world's two largest economies having an impact on economic growth.

On the data front, U.S. retail sales figures for July come out on Wednesday, which should give clearer signs on the strength of the American consumer at the start of the second half of the year.

There are also about 10 S&P 500 companies reporting earnings in the week ahead on Wall Street, as the earnings season starts to wind down, with big-name retailers such as Home Depot , Macy's and Walmart among the highlights.

Elsewhere, China also has key data, including industrial production on Tuesday, which will be watched for any signs of damage from the ongoing trade spat with the U.S.

Meantime, in Europe, traders will be able to get their teeth into the latest snapshots of U.K. inflation, employment, and retail sales for further indications on the continued effect that the Brexit decision is having on the economy.

Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. Turkey Turmoil Spillover?

The lira briefly plunged more than 20% to a record-low on Friday, while global markets reeled, as investors were spooked that the collapse in the Turkish currency would spread across emerging markets and hit the European banking system.

The lira ended down around 15% against the dollar, its worst day since Turkey's financial crisis of 2001, on the back of a deepening rift with the United States.

U.S. President Donald Trump said he would double tariffs on Turkish steel and aluminum, after imposing U.S. sanctions earlier in the week because of Turkey's detention of Andrew Brunson, an American pastor detained in 2016. Turkish authorities accuse Brunson of supporting a failed coup attempt earlier that year.

Turkey's President Recip Tayyip Erdogan failed to offer any economic solace when he spoke Friday, declaring that "they have their dollar, we have our god."

Erdogan also asked citizens to "change the euros, the dollars and the gold that you are keeping beneath your pillows into lira," noting this is "a domestic and national struggle."

Adding to emerging market currency woes was the Russian rouble, which sank to its lowest since April 2016 against the dollar, on threats of new U.S. sanctions over the Kremlin's alleged involvement in the poising of former Russian spy Sergei Skripal with the chemical agent Novichok earlier this year in the rural English town of Salisbury.

The geopolitical worries come as the U.S. is embroiled in a trade war with China. Both governments announced the possibility of imposing tit-for-tat tariffs on an additional $16 billion worth of goods last week.

2. U.S. Retail Sales

The Commerce Department will publish data on retail sales for July at 8:30AM ET Wednesday.

The consensus forecast is that the report will show retail sales rose 0.2% last month, moderating from a gain of 0.5% in June.

Excluding the automobile sector, sales are expected to increase 0.4%, the same as its increase a month earlier.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.

Besides the retail sales report, this week's calendar also features U.S. data on building permits, housing starts, industrial production, as well as surveys on manufacturing conditions in the Philadelphia and New York regions.

Economists reckon the data will do little to alter expectations that the Federal Reserve will hike interest rates two more times this year, with the next move higher coming at its September meeting.

3. Retailers Headline Last Big Week Of Earnings

While just 10 S&P 500 companies are due to report financial results this week, retailers are just getting started in what will be the last big wave of the second-quarter earnings season.

Home Depot (NYSE:HD) unofficially kicks things off when it reports on Tuesday; results from Macy’s (NYSE:M) are on the agenda for Wednesday; while Walmart (NYSE:WMT), the world’s largest retailer, is due to report results on Thursday.

Nordstrom (NYSE:JWN), JC Penney (NYSE:JCP) and Children's Place (NASDAQ:PLCE) are among the other major retailers reporting this week.

Other high-profile names set to report this week also include NVIDIA (NASDAQ:NVDA), Deere (NYSE:DE) and Cisco (NASDAQ:CSCO).

This earnings season has been stronger than analysts had expected. Nearly 90% of S&P 500 companies have reported quarterly results thus far. Of those companies, 76% have reported better-than-expected earnings.

4. China Industrial Output

China is to release July industrial production figures on Wednesday morning.

The consensus among analysts is that the data will show China's factory output grew 6.3%, accelerating from a 6.0%-gain a month earlier.

At the same time, the Asian nation will publish reports on fixed asset investment and retail sales.

Recent data has started to show that the world’s second largest economy may be losing steam, raising concerns about the potential fallout from a full-blown U.S.-China trade war.

5. UK Inflation Figures

The UK Office for National Statistics will release data on consumer price inflation for July at 0830GMT (4:30AM ET) on Wednesday.

Analysts expect annual CPI to inch up to 2.5%, a tad faster than the 2.4% increase seen in June, while core inflation is forecast to hold steady at 1.9%.

In addition to the inflation report, traders will focus on monthly employment and retail sales data, due on Tuesday and Thursday, respectively, for further hints on the health of the economy.

Britain's economy picked up some speed in the second quarter after a sharp winter slowdown earlier in the year, official data at the end of last week showed.

However, traders slammed the pound to its lowest in over a year against the dollar as the probability of a no-deal, or hard Brexit rises.

With less than eight months until Britain leaves the European Union, the government has yet to agree a divorce deal with Brussels and has begun talking more publicly about the prospect of leaving the bloc without any formal agreement on what happens next.

Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/

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