Much of this week will be dominated by the run-up to the Group of Seven summit in the French seaside town of Biarritz, where the heads of the leading global economies will gather this coming weekend.
The Fed will also get a fair slice of attention over the next few days. The minutes of its July meeting — when it cut rates for the first time since 2008 — are out on Wednesday. The next day the central bank hosts its annual economic symposium in Jackson Hole, Wyoming, where chair Jay Powell is among those scheduled to speak. The minutes from the last European Central Bank meeting are also due on Thursday.
Tensions are likely to remain high in Hong Kong as pro-democracy protests continue in defiance of Beijing. Italy has a no-confidence vote to look forward to and events are scheduled across eastern Europe to mark the first breaches in the Soviet Iron Curtain 30 years ago as communism began to crumble.
The second of five trials for former Malaysian prime minister Najib Razak on charges linked to a multibillion-dollar scandal at state fund 1MDB is due to begin on Monday.
It is a quiet week for economic data and on the companies front earnings season is drawing to a close, but the remaining updates from US retailers should offer more insight on consumer spending, while the travel sector faces holiday disruption with strikes at Ryanair.
The summit will provide Boris Johnson, the UK’s new prime minister, with his first run out under the global spotlight. Germany last week pointed to the likelihood of Mr Johnson using the summit for a “big moment” to announce either a breakthrough or breakdown in talks on Britain leaving the UK.
Downing Street sources also believe that Mr Johnson’s first appearance on the world stage will be critical to his Brexit strategy.
Mr Johnson has not visited any European capitals since becoming prime minister, and this is also being interpreted by many in the EU of a sign of his determination to steer towards a no-deal Brexit.
The prime minister has alarmed European leaders by insisting the backstop, aimed at preventing the return of a hard border in Ireland, must be scrapped. Unless the EU backs down, he has said the UK will leave the bloc by October 31, with or without a deal.
Ahead of the summit, Emmanuel Macron will hold talks with Russian president Vladimir Putin at Brégançon fort on Monday, where the French president is spending his summer holidays. The two leaders are likely to discuss Iran’s nuclear activities, Ukraine and Libya. Strong business and trade ties make Paris one of Moscow’s key partners in Europe despite years of sour relations between Russia and the west.
Justin Trudeau, Canada’s prime minister, is also due to give a speech on foreign affairs in Paris on Wednesday.
Italian prime minister Giuseppe Conte will address the country’s upper house of parliament on the government crisis on Tuesday, where he faces a no-confidence vote on the same day.
Matteo Salvini, Italy’s deputy prime minister and leader of Italy’s co-ruling rightwing League party, introduced a motion of no confidence in the prime minister after the anti-establishment Five Star movement voted against a cherished League rail project, leaving the alliance between the League party and Five Star close to collapse. Mr Salvini has also called for snap elections in October.
The relationship between the two governing parties has become increasingly tense in recent weeks after clashing over a series of policies including greater autonomy for the regions, justice reforms, motorway concessions and plans to boost public spending.
If Mr Conte loses the vote, President Sergio Mattarella may hold consultations to determine if a new government coalition can be formed. If those talks fail, Mr Mattarella could alternatively seek to form a caretaker government.
The renewed political uncertainty in Italy has ensnared Europe’s third-largest economy. News of Mr Salvini’s call for a no-confidence vote and new elections sent yields on government debt sharply higher, though they have since retraced those gains. The outcome of the vote could have implications for global markets amid existing economic jitters.
The minutes from the Federal Open Market Committee’s July policy meeting, due on Wednesday, will provide background to the thought process behind the US Federal Reserve’s first rate cut since 2008.
Eric Rosengren, president of the Boston Fed, and Esther George, president of the Kansas City Fed, voted against the cut, citing employment gains and other signs of enduring strength in the economy.
The minutes are likely to reinforce the idea that risk management considerations are a key reason the FOMC moved towards policy easing.
The ECB will on Thursday publish an account of its July policy meeting when it paved the way for rate cuts in the coming months by changing its forward guidance to say that it expected rates to remain “at their present or lower levels” at least through the first half of 2020.
Investors will be on the alert for any further signs the central bank could introduce a stimulus package at its next meeting in September.
The Fed minutes could, however, start to seem a little stale by the time the Jackson Hole symposium opens on Thursday and investors get a glimpse into the current thinking. All eyes will be on Jay Powell when he speaks on Friday.
The gathering’s theme this year is Challenges for Monetary Policy, and Markets Questions this week points out that it is a fitting one, as central banks keep cutting rates in a bid to stir activity as a mounting pile of negative-yielding debt — adding up to almost $17tn — indicates profound gloominess over the state of the world economy.
A quarter-point interest rate cut is fully priced in for September, but it is not clear what it would take to push officials to restart quantitative easing.
Some analysts expect no firm commitments from Mr Powell and for markets, which are pricing in an additional 65 basis points of cuts this year, to be disappointed. Others argue we could see another pivot from a Fed that has recently wrongfooted investors with its messaging.
Elsewhere, Egypt, the Middle East’s fastest-growing economy, is forecast to cut its deposit rate by 100 basis points to 14.75 per cent on Thursday.
An upbeat report on US retail sales last week soothed some fears on consumer spending. This week, updates from Home Depot, Lowe’s, Target, Kohl’s, TJX and others will provide further insight.
Chinese search engine operator Baidu is expected to report a fall of more than 70 per cent in second-quarter profit on Monday.
BHP, the world’s largest mining group reports on Monday. Global growth fears, the US-China trade spat and a slowdown in Chinese construction activity have weighed on the group, which has already led to forecasts being revised down after a mixed production update in July.
Fellow miner Antofagasta reports on Thursday, when it will hope to benefit from recent increases in copper production.
Irish building materials supplier CRH reports on Thursday, when it is expected to announce another £350m share buyback after agreeing the sale of its European distribution unit to Blackstone in a deal worth €1.6bn.
Housebuilder Persimmon reports on Tuesday as it tries to bolster its reputation after complaints about poor build quality.
Also reporting this week will be Non-Standard Finance — which abandoned its battle to buy rival Provident Financial in June — Laura Ashley, online gambling software provider Playtech and infrastructure investor John Laing Group.
Key reports this week include existing and new home sales in the US. Canada releases consumer prices data, along with June retail sales and manufacturing numbers before its second-quarter gross domestic product estimate the following week.
Investors will focus on Mexico’s early-August inflation data on Thursday to assess whether the easing cycle might continue in September after the first cut in interest rates in five years.
Economists are braced for inflation data out of Japan on Friday, which they expect to remain stuck at a two-year low of 0.6 per cent — no closer to the central bank’s long-elusive target of 2 per cent.
Monthly flash purchasing managers’ indices are out in the eurozone, Germany and France. German manufacturing is likely to be of particular interest after its economy contracted in the second quarter.
Second-quarter GDP numbers are also due from Mexico, Chile and Peru.
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