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Week ahead: UK inflation and retail sales, Eurozone PMIs, Fed minutes

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·5-min read
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Pedestrians wearing face coverings due to Covid-19, walk past a 'Sale' sign in the window of a closed H&M clothes store on a quiet Oxford Street in central London on March 24, 2021. - Britain's annual inflation rate unexpectedly fell in February as coronavirus curbs sparked heavy discounting for clothing and footwear, official data showed Wednesday, soothing market concerns over inflationary pressures. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
Pedestrians a H&M clothes store on Oxford Street in central London. Photo: Justin Tallis / AFP via Getty Images

Inflation showed its teeth last week after a bigger-than-expected jump in US and Chinese CPI raised policy tightening and higher interest rates fears, which sent global stocks into the red. 

While stocks paired back losses after the volatile week, investors will keep an eye on inflation this week as jitters over the impact of global monetary stimulus being dialled back continue to mount.

Things are slowly returning back to normal in the UK. On Monday, England will enter the third stage of its roadmap out of lockdown as indoor dining, pubs, entertainment and foreign travel resume. 

Despite that, the pandemic is still very much in the focus. 

Prime minister Boris Johnson, warned the lifting of COVID restrictions could face "serious disruption" due to the Indian strain, during a press conference on Friday. Johnson also announced plans to speed up the vaccine programme to curb its spread across the country. 

Watch: What is inflation and why is it important?

UK: Plenty of data on the slate for the FTSE and sterling

It is a big week in Great Britain with plenty on the schedule in terms of data. 

First up, most businesses will be allowed to reopen on Monday in England, with the exception of those in high-risk industries, such as nightclubs. International travel will resume under a traffic light system, travellers coming back from "green list of countries," don't have to quarantine upon return.

Unemployment claims and ILO unemployment figures are released on Tuesday. Optimism has been growing in recent weeks as the UK economy reopens, with the expectation that millions will start to return to the nations workforce as the furlough scheme ends later this year. 

On Wednesday, a hot inflation report for April is in the spotlight as concerns over higher prices rise. 

"In March, headline CPI came in at 0.7%, while core prices rose to 1.1%. If the US experience last week is any guide, we could see a large jump in both of these numbers, towards the Bank of England mandated goal of 2%," said Micheal Hewson, chief market analyst at CMC Markets. 

Retail sales data for April is on the slate fro Friday as well as May's flash PMI readings. Monthly retail sales are expected to soften, while the flash PMI estimates should remain robust. 

April's PMI data was in the positive, boosted by Britain's road to normality, against a backdrop of companies reporting higher demand for both goods and services. Services activity hit a six and a half year high at 61, while manufacturing rose to 60.9 — an eight-month high.

Meanwhile, retail sales have been in a positive direction since January's huge 8.2% decline, as the third lockdown shuttered shops once again. They slightly rebounded in February, with a 2.1% rise and again rising 5.4% in March, boosted by garden and DIY centres, with a 16% rise in household goods. 

Key company results: 

  • Imperial Brands (IMB.L), Topps Tiles (TPT.L), Shoe Zone (SHOE.L) — half year (Tuesday)

  • Vodafone (VOD.L) — finals (Tuesday)

  • Marstons (MARS.L) — half year (Wednesday) 

  • Premier Foods (PFD.L) — full year (Wednesday)

  • easyJet (EZJ.L) — half year (Thursday)

  • National Grid (NG.L), Royal Mail (RMG.L) — finals (Thursday)

US: Fed minutes, consumer confidence and more inflation

People walk past the New York Stock Exchange (NYSE) at Wall Street and the  'Fearless Girl' statue on March 23, 2021 in New York City. - Wall Street stocks were under pressure early ahead of congressional testimony from Federal Reserve Chief Jerome Powell as US Treasury bond yields continued to retreat. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
Investors will be keen to dive into minutes from the US Central Bank's latest meeting, due out on Wednesday. Photo: Angela Weiss / AFP via Getty Images

US inflation data shook the Dow (^DJI) last week to lows not seen since January, a few days after hitting 35,000. 

The drop came as inflation numbers rose 0.8%, hitting an annual rate of 4.2% – more than double the Federal Reserve's standard 2% target.

In terms of releases, Tuesday will see consumer confidence and new homes sales readings released. 

On Wednesday, investors will be keen to dive into minutes from the US Central Bank's latest meeting following the inflation shock. 

There are a slew of figures due on Thursday. First, a second look at the first quarter gross domestic product (GDP) reading – which last came in at an annualised rate of 6.4%. This is joined by the durable goods orders, pending home sales, and the usual weekly jobless claims numbers. 

Closing out the week, the core personal consumption expenditure (PCE) price index inflation-measure, the goods trade balance, personal spending, personal income, Chicago PMI and consumer sentiment data on Friday.

Eurozone: Lagarde speech, PMIs, CPI data

European Central Bank President Christine Lagarde addresses European lawmakers during a plenary session at the European Parliament in Brussels, on February 8, 2021. (Photo by Olivier Matthys / POOL / AFP) (Photo by OLIVIER MATTHYS/POOL/AFP via Getty Images)
European Central Bank President Christine Lagarde. Photo: Olivier Matthys / POOL / AFP via Getty Images

There are a few economic releases and speeches from EU finance ministers and ECB's Lagarde on the slate to keep investors busy this week. 

The region's final consumer price index (CPI) for April is due on Wednesday. 

ECB's Lagarde and governing council member Robert Holzmann along with International Monetary Fund's (IMF) managing director Kristalina Georgieva speak at a conference on "Gender, Money and Finance" hosted by the Austrian National Bank on Thursday.

On Friday, Italy and the European Commission co-host the G-20 Global Health Summit in Rome, to discuss the lessons from the COVID-19 pandemic. 

Also on Friday, Eurozone finance ministers and central bank bosses will hold an informal meeting, with another meeting of a larger group of EU finance ministers and central bank chiefs on Saturday.

Friday will also see the release of a host of economic number for the region. Flash PMI data for the Eurozone's two biggest economies, Germany and France are expected to underperform. 

German manufacturing PMI for May is expected to fall slightly to 66.0, from 66.2 in April. The region-wide PMI is expected to slow to 62.3 from 62.9. 

Watch: What UK government COVID-19 support is available?