Summary
The upcoming week will feature significant data releases focused on both the physical economy and monetary policy. Industrial production figures reveal mixed trends: Korea’s growth slowed to 2.5% in June from 3.5% in May, Japan’s production rose by 1.3%, and Brazil shifted from a decline to a 1.5% increase. In China, manufacturing PMI fell into deeper contraction, although the Caixin PMI still showed slow expansion, while India’s PMI indicated strong growth. Germany’s manufacturing PMI dropped further into contraction at 42.6, affecting the wider Euro Area’s PMI, which is also expected to fall. The US manufacturing index continues to contract at 48.2. GDP growth in Saudi Arabia and Indonesia reveals a slowdown, with Saudi Arabia experiencing negative growth at -0.5% in Q2. Central banks in Japan, the US, and Brazil are expected to keep interest rates unchanged, whereas the Bank of England might reduce rates by 0.25% to 5%. France’s budget deficit remains a concern as it fails to meet EU targets.
In the oil market, the Baker Hughes oil rig count increased to 482, while WTI oil prices averaged $77.9, down $3.7. Major energy companies reported a 21% decrease in Q2 profits from Q1 but a 41% increase from Q2 2023, with capital expenditure rising by 15%. There is a shift towards increased productive investment over shareholder returns. Companies like Baker Hughes and Halliburton anticipate robust international growth, particularly in Latin America, West Africa, and the Middle East.
The Dutch Central Planning Bureau's World Trade Monitor showed a slight increase in global trade for May, although revised April figures indicated a slowdown. The Eurozone, UK, and China saw import declines, while the US experienced a rise. Exports showed modest growth, particularly from China and emerging Asia. Industrial production increased marginally, with significant gains in China and emerging Asia. Overall, advanced economies, particularly the EU, UK, and Japan, are underperforming compared to emerging economies, which continue to grow, particularly China, despite its slower reopening.
