A week marked by inflation and earnings season

The beginning of the second week of July in the financial markets is marked by mixed moods in European and Asian stock exchanges, a slight correction of Friday's sell-off of the US dollar and a similar downward correction in the oil market, as well as the continuation of Bitcoin's consolidation above the level of 30. dollars. On Monday, moods in the markets are quite holiday-like, but there should be much more interesting in the following days. This week will be marked by the publication of inflation data from the US, and the end of the week will be marked by the start of the earnings season on Wall Street.

China facing deflation

Inflation data from China were released tonight. The Middle Kingdom found itself on the brink of deflation. In June consumer price index (CPI) recorded zero dynamics year-on-year, which is its lowest reading in over 2 years. It is likely that in July China will be in deflation.

China is experiencing deflation at the level of producer prices (PPI). These are falling for the 9th consecutive month. In June, it was a decrease of 5,4 percent. compared to a year-on-year decline of 5%. and a decrease of 4,6 percent. in May.

Both published reports confirm the problems of the Chinese economy, but at the same time they open the field to speculation about future packages stimulating economic growth.

The market is waiting for data from the US

Today's inflation data from China were noticed by the markets, but they are not the most important events of the week. Other data on inflation will be crucial. Especially the ones from the US.

On Wednesday, data on consumer inflation (CPI) will be published, followed by producer inflation (PPI) a day later. Both reports will of course be analyzed in the context of future US decisions Federal Reserve (Fed) on interest rates.

CPI inflation in the US is expected to fall to 3,1% in June. year-on-year from 4 percent. in May, and core CPI inflation to 5%. from 5,3 percent At the same time, PPI inflation was expected to fall to just 0,4 percent. from 1,1 percent y/y in May, and core PPI inflation to fall back to 2,7 percent. from 2,8 percent Y/Y.

Investors will analyze the future moves of the Fed not only on the basis of the data described above, but will also listen carefully to the numerous speeches of Fed representatives this week.

Earnings season on Wall Street

Another important event in the US, which may have a potential impact on the behavior of stock exchanges around the world, will be the publication of earnings by Wall Street companies starting in the second half of the week. The report for the second quarter will be released on Thursday. PepsiCo, and on Friday the following banks will do it: Citigroup, JPMorgan Chase and Wells Fargo. From next week, company results will be the main event on the global equity markets.