Monday’s emergency summit of eurozone leaders is likely to set the tone for markets for the week and could even be the tipping point in the Sisyphean epic being played out between Greece and its creditors. Their failure to reach an agreement this week led to Monday’s meeting, a last-ditch effort to prevent the country defaulting on its debts.
Tuesday sees a flurry of activity surveys released purchasing managers’ indices for June are out for China, France, Germany and the eurozone as a whole. The eurozone manufacturing PMI saw the rate of expansion increase in May with the headline index up to 52.2 from 52 in April, manufacturers are benefiting somewhat from a weaker euro and reduced energy costs; the pace of growth is set to remain stable in June at 52.2.
Eurozone services PMI fell marginally in May to 53.8 from 54.1 in April, still well in expansion territory. Confidence in certain European markets is on the wane and consequently service sector growth is expected to slow again in June. Analysts expect the index to fall to 53.6.
The Chinese manufacturing PMI has been struggling to grow since the end of last year with an average reading of 49.6 since December. Little change in this trend is expected tomorrow — analysts expect 49.5, just shy of the 50 mark that indicates expansion, as the Chinese economy continues to cool.
German PMIs are expected to remain firm in June and in line with May’s expansionary readings of 51.5 and 52.9 for manufacturing and services respectively.
In France the manufacturing PMI is expected to receive a slight boost from temporary tax incentives for industrial investment. Analysts expect this barely to push the sector into expansion territory with a reading of 50 expected for June from 49.4 in May. The French services sector, which has been firmer in recent months with a May PMI reading of 52.8, is expected to continue expansion albeit at a slightly reduced rate of 52.5.
The final revision for US first-quarter gross domestic product is released on Wednesday and follows a large downward revision at the second estimate that pushed growth to minus 0.7 per cent at an annualised rate. The final estimate is expected to see an upward revision, down to greater consumer spending growth in the quarter than previously thought, and thus analysts believe first-quarter GDP to have contracted 0.2 per cent at an annual rate.
Japanese inflation data for May are released on Friday and CPI is expected to show a 0.4 per cent year-on-year fall as the effects of last year’s VAT hike disappear entirely from the readings.
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