The European Central Bank (ECB) is expected to keep interest rates constant this time after its last interest rate increase.
1. ECB IS EXPECTED TO KEEP RATES STABLE
The ECB is expected to keep interest rates constant next Thursday, following last month’s interest rate increase. The ECB was the first major central bank to increase interest rates after the start of the war in Iran.
The rapid decline in energy prices last month had alleviated officials’ concerns about inflation to some extent. However, the resumption of the conflict led to continued uncertainty about the future.
Despite this, oil prices remain well below the levels seen during the peak periods of the conflict. In addition, future oil prices are between the basic scenario drawn by the ECB in June and the more optimistic scenario. Therefore, traders are of the opinion that the current situation has not changed enough to force the ECB to raise interest rates again this week.
This caused much attention to be focused on September. While traders think that the ECB will increase interest rates again in September, economists are more cautious about this possibility.
Investors will closely monitor the signals ECB President Christine Lagarde will give regarding September and beyond in her statements on Thursday. Recently, markets have strengthened their expectations that another interest rate increase may be made after September. Whether Lagarde will support these expectations will be one of the most important topics of the meeting.
2. SECOND QUARTER BALANCE SHEET
The balance sheet season in the USA will intensify next week.
Investors on Wall Street, which is close to a record, will closely follow Alphabet’s balance sheet.
Google’s parent company Alphabet will be one of the first major technology companies to announce its earnings this quarter. Investors will especially closely monitor whether there will be any changes in the company’s plans regarding capital expenditures allocated to artificial intelligence investments. The strong increase in artificial intelligence investments was among the main reasons for the rise in technology and semiconductor stocks this year.
Tesla, Intel and American Express are among the companies that will announce their balance sheets next week.
According to LSEG IBES data, the second quarter profits of S&P 500 companies are expected to increase by 25.7 percent compared to the same period last year, after more than 40 companies have announced their balance sheets so far.
The profits of major US banks, which announced their balance sheets this week, came in above expectations, supported by the strong increase in merger and acquisition brokerage revenues and transaction revenues.
3. WHO WILL BE THE MINISTER OF FINANCE IN ENGLAND?
Investors in British assets are increasingly confident that Andy Burnham, who takes over as prime minister next Monday, will stick to the government’s tight fiscal rules and maintain markets’ confidence.
Burnham, the former mayor of Manchester, will take over from Keir Starmer. But in recent weeks, the focus of investors has been on the question of who the new prime minister will appoint as finance minister.
The name most mentioned for this post is Interior Minister Shabana Mahmood. Although Mahmood’s views on economic policies are not well known in the investment community, markets tend to trust him for now.
While sterling rose to its highest levels in the last year against the euro, it has also been among the major currencies with the strongest performance against the dollar recently. British government bonds, which generally react sensitively to political and financial uncertainties, also remained flat.
Markets are now focused on whether Burnham and the finance minister she will appoint can maintain this atmosphere of trust.
4. INDONESIA IS AT THE CENTER OF THE AGENDA
A busy week awaits investors trading in Asian markets. While the Central Bank of Indonesia is expected to increase interest rates on Wednesday, the bank is trying to support the rupee, the currency of the country, which has a foreign trade deficit for the first time in six years. Meanwhile, the government’s economic policies continue to raise question marks before credit rating agencies and global investors.
S&P Dow Jones Global Indices began evaluating whether Indonesia should be downgraded from emerging market status to “frontier market” status, following MSCI this month.
In China, all eyes are on the loan interest rate to be announced on Monday. Markets do not expect the People’s Bank of China to change its policy approach. However, following the growth data announced on Wednesday and indicating the weakest quarterly performance since the coronavirus period, the pressure to take additional steps to revive the economy has increased.
Foreign trade balance data will be announced in Japan on Wednesday. On Friday, inflation figures and leading PMI data will be the main indicators that the markets will follow closely.
THE 5TH WORLD CUP IS COMING TO AN END
After five weeks of surprises, early eliminations and breathtaking matches, the FIFA World Cup has come to an end. In the final to be played on Sunday, the last World Cup champion Argentina and the European champion Spain will face each other.
The tournament created significant activity not only in terms of football but also in terms of the business world. Fans’ flight ticket, hotel, jersey and beverage expenses; It provided additional income to many sectors, from travel companies to sportswear manufacturers.
One of the biggest winners of the tournament was Adidas. German sportswear giant Adidas sponsored 14 teams competing in the World Cup. Adidas, which was also the jersey sponsor of Argentina and Spain, which made it to the finals, guaranteed to be associated with a champion team, no matter which team won the cup.
Its rival, Nike, could not get what it wanted from the tournament. None of the 12 teams it sponsored, including England and France, managed to advance to the final.
For brewers, the picture is not so clear. The early bid farewell to the tournament by countries with high beer consumption, such as Brazil, Germany and Colombia, reduced hopes for the expected increase in sales. On the other hand, the strong performance of Western and Northern European countries such as England, France, Switzerland and Norway indicates that Carlsberg can continue to profit from the tournament.
