As the weather heats up, August usually marks the busiest period for travel firms, but after getting battered by coronavirus lockdowns, the aviation, travel, leisure and hospitality industries have been lagging behind in market recovery.
Economic data this week will play a critical role in helping the UK and the Eurozone assess the damage of the coronavirus crisis on their economies, with gross domestic product (GDP) figures due for both on the slate.
Concerns over the impact of the furlough scheme on the jobs sector, second virus spike fears, heightened US-China geopolitical tension, as well as a raft of key data to be released over the next few days are also set to impact market activity.
Other developments over the weekend also caught investors’ eyes:
Key company results to watch out for:
Prudential — half-year results (Tuesday)
InterContinental Hotels — half-year results (Tuesday)
Balfour Beatty — half-year results (Wednesday)
UK: Employment data, GDP results and claimant count change
As the UK continues to reopen bits of the economy all eyes will be on Tuesday’s employment data. After a bloodbath of redundancies over the past few months, there is reason for optimism, as some restaurants, pubs and hair salons reopened in July.
Over the last few months firms have been forced to slimline after coronavirus took a massive chunk from their profits. So far, there have been more than 167,000 redundancies at big British employers, since the start of the lockdown, with almost 8,000 job losses added last week.
Claimant count change figures, which measure the number of people receiving unemployment benefits in July, are also due on Tuesday.
After a 2.2% decline in the first quarter, the main focus will be on Wednesday, when Britain finds out how hard a hit the economy took in Q2 with the release of GDP data as well as the release of industrial and manufacturing production for June.
Acceleration is needed in June to pull data back into the mid-teens, after the UK economy constricted -20.4% in April followed by a 1.8% gain in May.
There could be a light at the end of the tunnel however for GDP on the month, as the reopening of non-essential shops spurred consumer spending and factories resumed production.
It is yet to been seen if there will be a V-shaped bounce-back, but May saw industrial (8.4%) and manufacturing (6%) production rebound strongly, so there is hope as those industries got back on their feet after April lockdowns.
Key data: Important figures around average earnings index are due on 11 August, with trade balance for June and Q2 business investment expected on 12 August.
Europe: Will the Eurozone bounce-back?
In line with global trends, the EU also saw a rise in coronavirus cases, which has lead to more travel restrictions — with the UK recently adding Belgium to the quarantine list, which also includes Spain.
On Friday, the full extent of the coronavirus pandemic on the Eurozone economy will be laid bare as it expects key Q2 GDP data as well as year-on-year GDP figures.
This week will also see how industrial production and exports are shaping up in the single currency zone, after encouraging retail sales figures last week.
The timetable for releases is as follows:
10 August — Portugal releases industrial sales and service sales
12 August — Industrial production figures for the Eurozone
14 August — Eurozone June trade balance data is released
Elsewhere: Turkey’s central bank is looking to limit the Lira’s plunge, using backdoor tools that could tighten policy by 300 point, bankers estimate.
A weaker Lira is likely to worsen inflation, which could compromise businesses’ ability to repay debt, knock citizens’ confidence and hit local banks — leaving authorities powerless to prevent a currency collapse.
US: Are Americans going shopping? What is next for Trump and China?
The star of this week’s US releases is retail sales, which shows whether various economic woes and renewed restrictions in several US states slowed down American consumers’ spending.
The rise in US coronavirus cases also has the potential to send jobless claims and continuing claims higher, with figures to be released on Thursday. Investors will look to see whether legislators pass new laws to cushion the cliff-edge expiry of the $600 (£460) a week unemployment benefits.
Although, the US election has yet to yield much traction on markets, that might change soon, as presumptive Democratic nominee Joe Biden is expected to announce his running mate ahead of the Democratic Convention on 17 August.
Geopolitics takes centre-stage once more following Trump’s incoming ban on US businesses dealing with TikTok and WeChat owners — this time with the US looking to impose sanctions on Hong Kong chief Carrie Lam.
The sanctions come ahead of the US reviewing the current trade deal between the economic powerhouses on 15 August to decide whether China has adhered to the pact.
But, Trump continuing to hammer China for the COVID-19 outbreak and US health secretary Alex Azar’s impending visit to Taiwan is sure to rile Beijing.
OPEC’s Monthly Oil Market Report, crude oil inventories, core CPI for July, Federal Budget Balance and industrial production are also on the slate for the US this week.