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Markets brace for UK spending blitz and US jobs data as COVID-19 deaths continue

Disintegration of the world globe isolated on white background. Photo: Getty

Markets are in for a busy week as the UK is set to unveil a range of spending plans to stimulate the economy while the US will publish its monthly jobs report.

Investors will be watching closely how countries are tackling the spread of COVID-19, which has vastly different from nation to nation, and state to state, as global coronavirus cases exceeded 10 million on Sunday.

Markets will also digest weekend developments:

Britain: PM’s announcement, Bank of England, GDP

British Prime Minister Boris Johnson and Chancellor Rishi Sunak visit Pizza Pilgrims in West India Quay, London Docklands on June 26, 2020 in London, England. Photo: Heathcliff O'Malley - WPA Pool/Getty Images

UK prime minister Boris Johnson is expected to say that he wants to ready the country for the “thunderclap of economic consequences” caused by the coronavirus pandemic.

An infrastructure delivery taskforce will be chaired by Chancellor Rishi Sunak and will be told there are now “no excuses for delays” to building programmes after the country demonstrated it can move at pace during a national emergency.

On Sunday, Britain’s opposition party Labour warned that joblessness in the UK could be as bad as it was in the 1980s unless the government does more to assist businesses.

A series of policy speeches over the next week from the Bank of England are expected, including one from its chief economist, Andy Haldane.

Uncertainty over a continuation of the pandemic means that central bank policy remains unclear in the UK, ING analysts have noted.

GDP growth rate for the first quarter of 2020 is expected on 30 June. UK GDP in April fell by a record 20.4% but the data is not going to reflect this. Instead it is expected to show that the economy was slowing even before the lockdown was announced and might show the impact of the early days of the pandemic.

Business investment data for Q1 and Nationwide Housing Prices are also expected 30 June.

Recently, the International Monetary Fund (IMF) warned that the UK economy is likely to shrink by 10.2% this year in the wake of the coronavirus. It also said that the pandemic will hit Britain’s economy much harder than much of the rest of the world.

Europe: A raft of key data, Brexit developments

A host of data including economic sentiment, business confidence, and industrial sentiment for the region is out 29 June, as is inflation data for Europe’s largest economy — Germany.

  • Germany’s unemployment rate will be out 1 July, as will the EU’s final Markit Manufacturing PMI.

  • The Markit Services PMI and Markit Composite PMI will be out 3 July.

Brexit talks are still limping on in the background.

During a conversation on Saturday with Polish prime minister Mateusz Morawiecki, Downing Street confirmed Johnson reiterated that the UK was prepared to leave on “Australia terms,” if no agreement was forthcoming.

Australia has no bespoke trade deal with the European Union, leading Brexit critics to describe the proposals as akin to leaving on no-deal terms, albeit with a number of mini-deals put in place to allow vital sectors, such as air travel, to continue.

US: All eyes on jobs

Hundreds of unemployed Kentucky residents wait in long lines outside the Kentucky Career Center for help with their unemployment claims on June 19, 2020 in Frankfort, Kentucky. Photo: John Sommers II/Getty Images

Data on non farm payrolls, unemployment rate, weekly jobless claims, export and import plus balance of trade data expected on 2 July.

Some 2.5 million jobs were added in May with a further 3 million gain anticipated in June, according to the market consensus, IHS Markit analysts said. While the jobless rate is expected to ease further from a post-war record 14.7% in April, it will inevitably remain elevated, they added.

Pending home sales is out 29 June, while manufacturing data (ISM Manufacturing Prices, ISM Manufacturing Employment, Markit Manufacturing PMI) is expected 1 July.

Minutes of the Fed’s June meeting are to published 1 July. The FOMC had left monetary policy unchanged, but warned of major downside risks to growth.