Pompeo visits UK
Mike Pompeo kicks off the week on Monday with a two-day visit to the UK, where the US secretary of state will discuss coronavirus, China and Hong Kong and the US-UK free trade agreement with Britain’s prime minister Boris Johnson and Dominic Raab, foreign secretary.
Mr Raab will also update the House of Commons on Monday on the UK’s extradition arrangements with Hong Kong — a week after the UK banned Chinese telecoms company Huawei as a long-term supplier for its 5G networks over concerns about the security of its infrastructure.
US coronavirus bill
The US Senate will begin a debate this week on a fifth coronavirus-response bill.
Democrats are pushing for a wide-ranging package worth an additional $3tn, while White House officials and congressional Republicans have suggested a more modest amount, worth $1tn, that could struggle to meet all the needs.
Democrats are also pushing for more federal aid for state and local governments affected by coronavirus, which Republicans have resisted.
The two parties are at odds over extending special unemployment benefits that are due to expire at the end of July, as well as a massive small business-loan programme that runs to early August.
UK public finances
On Tuesday the Office for National Statistics releases public finance figures for June. The UK government’s debt exceeded the size of the UK economy in May for the first time in more than 50 years as borrowing surged to pay for coronavirus mitigation measures.
May’s figures showed the level of public borrowing to be on course to end the financial year about £300bn in the red, twice as bad as the worst year in the global financial crisis of 2008-09 and about 15 per cent of national income.
Companies news and earnings
Monday is the deadline for EU antitrust regulators to decide whether to clear Google’s $2.1bn bid for fitness-tracking company Fitbit, a deal that has prompted concerns from consumer groups.
Uber will make a last-ditch attempt on Tuesday to overturn a UK court ruling that its drivers are workers rather than independent contractors.
The company begins an appeal at the UK Supreme Court where it will argue that it is not an employer but simply an intermediary that uses technology to connect self-employed drivers and customers.
The hearing will shine a light on the gig economy of insecure contract work, which employs an estimated 4.7m people in the UK alone. It is being closely watched because of its wide-ranging implications for other companies.
Tesla reports earnings on Wednesday, with the consensus among analysts pointing to the electric carmaker reporting a fall in quarterly revenue and posting a loss.
Investors, however, can’t seem to get enough of the company.
Tesla’s shares last week hit more than four times the low point they touched during the March sell-off, prompting boss Elon Musk to sum up his reaction to Wall Street’s latest bout of euphoria over his company in one word: “Wow.”
Coca-Cola and United Airlines report on Tuesday. Both are expected to take pandemic hits, while store closures and advertising dips are likely to weigh on AT&T and Verizon when they report on Thursday and Friday respectively.
IBM is expected to suffer a revenue hit due to falling software sales when it reports on Monday, but Microsoft on Wednesday and Intel on Thursday are both set to benefit from the global shift to homeworking and remote learning. Ad-spending woes are expected to take their toll on Twitter on Thursday.
In the UK Stagecoach’s full-year results on Wednesday are expected to suffer from the UK’s public transport system grinding to a near halt during lockdown.
Investors will hope to learn the same day whether or not soft-drink maker Britvic will pay a dividend when it reports.
G4S, which employs more than 500,000 people in 90 countries, will report on Thursday. The security company said last week that first-half earnings would be “significantly” higher than expected. It has also announced plans to slash 1,000 jobs from its cash handling business in the UK.
On Thursday analysts fear Unilever could report its worst quarterly sales performance in nearly two decades.
Struggling gas utility Centrica reports on Friday. It fell out of the FTSE 100 last month and announced a further 5,000 job cuts, after the coronavirus crisis added to several difficult years marred by mass redundancies, profit warnings and dividend cuts.
Vodafone has a first-quarter update on Friday, as mobile operators prepare for the possible costs of acquiring 5G spectrum and equipment in the face of Huawei’s forced exit from the UK by 2027.
Blackstone, American Express, Philip Morris, Lockheed Martin, Capital One, Novartis, Snap, Swiss banks UBS and Julius Baer, Halliburton, Daimler and Hyundai are among the other big names reporting this week.
On Tuesday the US Senate banking committee finally votes on whether Trump nominees Judy Shelton and Christopher Waller will join the Federal Reserve Board of Governors.
Ms Shelton has been the subject of concern from both Republicans and Democrats over her past support for a gold standard and her abrupt shift towards easier monetary policy. There have also been questions over whether she could be sufficiently independent from the White House.
On Thursday Bank of England policy setter Jonathan Haskel is due to deliver an online speech on the economic effects of Covid-19.
On Monday, the People’s Bank of China will decide its key rate, which is likely to remain at 3.85 per cent, with the recovery of the country’s economy in June seen as giving the bank enough room to keep its monetary policy stance on hold for now.
No rate changes are expected from Nigeria, which meets on Monday. Policymakers in Hungary are unlikely to cut rates further when they meet on Thursday following the unexpected cut in June. Ukraine meets the following day, again with no changes forecast and Turkey is set to hold on Thursday, with inflation still running high.
South Africa’s policymakers meet the same day when it is expected to be a very close call on whether or not they vote in favour of a slight rate cut.
Russia meets on Friday when the market predicts a 25 basis point cut, though central bank governor Elvira Nabiullina has said inflation data show there is room for a bigger cut, leading some analysts to expect a 50bp cut.
Flash PMIs across Europe on Friday will be the data point to watch this week, when we get a chance to see how services and manufacturing activity in the eurozone, Germany, UK and France held up during July.
June figures showed a substantial rebound for the eurozone but were nevertheless below the 50 threshold that separates contraction from expansion. Most economists expect this month’s surveys to rise above that line, but warn that the pace of progress is likely to be slow.
In the UK, the dominant services sector is expected to follow manufacturing and construction back into expansion.
The UK also has retail sales numbers out on Friday, which are predicted to increase again after bouncing back in May.
US initial jobless claims will be closely watched on Thursday after last week’s data showed that 1.3m Americans were still applying for the first time for benefits.
Canada has retail sales on Tuesday and its consumer price index is out the following day.
In Asia this week trade figures from Japan, South Korea and Thailand will give some indication of how the pandemic is playing out.
The Bank of Japan’s preferred measure of core inflation, CPI, is out Tuesday and Hong Kong has CPI data due the same day. South Korea has its preliminary reading of second-quarter GDP on Thursday.