After last week’s market turmoil caused by North Korea and the US being at loggerheads, an easing of the tensions between the two countries has seen a sense of calm return. Not only does North Korea appear to be toning down some of the belligerent rhetoric, but China has stepped in to comply with UN sanctions against the country.
So after Monday’s gains, markets are expected to move higher again at the open:
IGSquawk
(@IGSquawk)Our European opening calls:$FTSE 7374 +0.28%
$DAX 12219 +0.44%
$CAC 5141 +0.39%$IBEX 10507 +0.43%$MIB 21785 +0.29%
Agenda: UK inflation figures and US retail sales in focus
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
A busier day for economic figures sees the release of UK inflation data and US retail sales figures for July.
We’ve already had German GDP figures, which have come in slightly below expectations (more shortly…..)
On the UK inflation front, the consumer price index is expected to edge up from 2.6% year on year to 2.7& after a surprise fall in June. Michael Hewson, chief market analyst at CMC Markets UK, said:
When the last set of inflation numbers were released in June they showed a sharp fall in headline CPI from 2.9% to 2.6%, a welcome decline at a time when consumers have been feeling an increasing squeeze on their incomes. This fall raised hopes that inflation may well have peaked and today’s July CPI numbers could well go further in reinforcing that belief, though most expectations are for a tick back higher to 2.7%, while core CPI is also expected to rise to 2.5% from 2.4%.
A rise would be at odds with the recent softening in recent PPI numbers, which have slipped from 20% at the beginning of the year and could come in as low as 6.9% in today’s July numbers, but in line with the Bank of England’s forecasts which suggest we could see 3% before year end.
Despite the Bank’s recent dovishness regarding interest rates, any increase could put that conviction to the test. But with the pound steady at $1.2963, the market clearly believes there is no hurry for the next rate rise.
Meanwhile the retail price index – expected to come in at 3.5% – will be of particular interest to Britain’s train passengers (which, let’s face it, is most of us at one point or another.) For some reason the July RPI is used to calculate rail fare increases which come into effect in January, so prepare for further hikes.
Here’s our preview of the inflation figures:
Elsewhere we get US retail sales figures later which could show a pick-up in consumer spending after an underwhelming second quarter.
The agenda:
9.30 BST: UK inflation figures
1.30 BST: US retail sales