Marketmind: Inflation spotting

FILE PHOTO: Shoppers browse in a supermarket while wearing masks to help slow the spread of coronavirus disease (COVID-19) in north St. Louis, Missouri, U.S. April 4, 2020. REUTERS/Lawrence Bryant
FILE PHOTO: Shoppers browse in a supermarket while wearing masks to help slow the spread of coronavirus disease (COVID-19) in north St. Louis, Missouri, U.S. April 4, 2020. REUTERS/Lawrence Bryant

A look at the day ahead from Saikat Chatterjee

Markets are awaiting one of this year's most important U.S. data releases-- inflation data for June. A yearly rise of 4.9% is likely, according to pollsters, but after two months of stronger-than-expected prints, risks may be to the upside. Anything north of 5.5% might fuel a market selloff, analysts reckon.

Investors will remember that following recent upside surprises, the Fed pivoted hawkish at its June policy meeting. But so far, market action doesn't reveal much unease -- MSCI's global stock index scaled record highs earlier, while European and U.S. stock futures are flat to firmer.

There was reassuring data from China with export growth accelerating to 32.2% year-on-year. While import growth slowed, it too exceeded expectations.

U.S. second-quarter earnings also kick off in earnest later in the day, with JPMorgan and Goldman Sachs among the first to report. Investors will watch for elevated margin pressures from higher input costs though expectations are for S&P 500 companies' earnings per share to rise 66%, IBES data from Refinitiv shows.

In corporate news, Swiss watchmaker Swatch returned to profit in the first six months of 2021 and sales jumped more than 50%, while Danish drugmaker Novo Nordisk will acquire U.S. drug developer Prothena's heart therapy, PRX004, in a deal worth up to $1.23 billion.

Finally, the renewed COVID-19 upsurge is in the background, with France pledging tougher restrictions for people who didn’t get vaccinated.

Graphic: US inflation - https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrzaewve/inflation.PNG

Day ahead:

-U.S June inflation data due at 1230 GMT.

-Bond auctions: U.S. 12-month and 30-year; Japan 20-year; Germany 2-year

-Federal Reserve events: Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren

-U.S. earnings: Pepsi, JP Morgan, Goldman

-European earnings: DNB, Nordic Semiconductor

-Bank of England has scrapped pandemic-era curbs on dividends from HSBC, Barclays and other top lenders

-Alibaba Group and Chinese state-backed firms are exploring bids for a stake in Unisplendour,, a cloud computing infrastructure firm, for as much as $7.7 billion

(Reporting by Saikat Chatterjee; editing by Sujata Rao)

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