More action from central banks is expected this week, with the Bank of England, Norway’s central bank, and the Reserve Bank of Australia all holding rate-setting meetings.
The European Central Bank, however, has a non-monetary policy meeting midweek. This won’t stop it from keeping an eye on the growing political uncertainty in France and the Netherlands, where extreme right-wing politicians are gaining ground.
Additionally, there are the usual early survey results of economic activity from leading economies including Japan, Singapore, South Korea, Australia, the US, the UK, and much of Europe.
The Bank of England meets this week. Normally, without an election, the central bank would be widely expected to cut rates, but no one is quite sure this time.
Some analysts in the UK speculate that the current Taylor Swift tour might lift hotel and other costs, temporarily boosting inflation and delaying a rate rise decision. However, this type of analysis, often coming from male analysts, tends to exaggerate the impact of Swift’s tour and her fans, known as Swifties.
This belief was debunked in the US and Australia. In Australia, the impact of her tour was compounded by the Australian Open tennis, the tour by Pink, and the finals of the Big Bash cricket competitions. These events did cause a temporary rise in travel and accommodation costs and spending on cafes and dining out, but the effect dissipated quickly.
In the US, it’s retail sales week, and economists and analysts are generally pessimistic. Expectations range from no change to a small rise (perhaps 0.2%) for May after April’s 0.3% increase, and a small rise once car sales are discounted. US analysts note increased discounting of new car prices this month, more than seen in over a year.
The weak forecast is attributed to the ongoing impact of high interest rates and, similar to Australia, a decline in consumer interest in big-ticket items, with more focus on necessities like food.
Globally, most corporate events are annual meetings in the US, Asia, the UK, and Europe. The meeting that will be watched closely is Toyota’s in Japan on Tuesday.
The company will address the ongoing investigation into regulatory cheating by Toyota and other car companies. Toyota has already held a major defensive press briefing and apology, but the scandal threatens to disrupt its strategy of promoting hybrids over battery-powered cars and pursuing a hydrogen fuel future.
Toyota has already stopped importing petrol-powered versions of nine of its brands into Australia, with the more expensive hybrids now the only versions available.
Notable results are expected from the Hong Kong-based airline, Cathay Pacific.
However, it’s Australian interest rates that will dominate the coming week here, with the two-day Reserve Bank meeting kicking off today and concluding with a decision and media briefing tomorrow afternoon. It will likely be a quiet affair.
No change is expected, and we can anticipate the bank and governor Michelle Bullock to continue emphasizing concerns about persistent inflation and maintaining a tough monetary policy stance.
There is little important data this week except for the early activity survey report for June. Most June 30 corporates are now in a quiet period, though an occasional trading update might emerge if figures look below or (rarely at the moment) above guidance or expectations.
The biggest local event will be the listing of the highly sought and hyped Mexican fast food group, Guzman y Gomez, on Thursday, June 20. The IPO is the most anticipated in years, with a large group of well-connected Sydney and Melbourne investors and advisers involved, all looking for a significant premium above the float price of $22 a share.
Morningstar speculated last week that the price might be around $7 a share too high, but we will see on Thursday when the listing occurs and FOMO (Fear of Missing Out) investors chase the stock.