US: US retail sales edged up 0.2% in June, slightly below expectations and the previous month's growth of 0.5%; EUR: Eurozone inflation eases in June, registering a year-over-year rise of 5.5%, down from 6.1% in May and 7% in April, marking the lowest rate since early 2022; ZAR: Improved load-shedding eases operating costs, and more stable fuel prices and deflation support lower headline inflation; GBP: UK inflation eased more than anticipated in June, reaching 7.9%, the slowest rate in over a year; YEN: China's growth is stagnating, prompting urgent policy intervention ; AUS: Australia's economy remains resilient as it adds 32,600 jobs despite a significant interest rate increase.
US: RETAIL SALES UP A NOTCH, KEEPING THE ECONOMY AFLOAT
A glimmer of hope shines on the US retail landscape as sales make a steady ascent, rising by 0.2% in June.
Though it fell short of expectations and the previous month's growth, the resilience of American retail consumers is evident, painting a picture of determination in challenging times. Behind this rise in sales lies the power of online shopping, with Amazon's epic Prime Day setting new records, becoming the talk of the town.
Not to be overshadowed, brick-and-mortar stores like furniture, electronics, clothing, and appliance shops also contributed to the growth, adding their own flavor to the retail mix. The best part? This growth provides much-needed support to the economy without pushing it to the brink of overheating.
As a potential bonus for investors, the possibility of the central bank holding off on interest rate hikes is becoming more tangible, promising a period of stability and exciting opportunities.
EUR: JUNE INFLATION SOFTENED TO EASE JULY COST PRESSURES
Breaking news from Eurostat reveals a noteworthy development in the Eurozone as inflation shows signs of easing in June.
Although prices still witnessed a substantial year-over-year increase of 5.5%, there is a glimmer of hope as it comes down from the higher rates recorded in May (6.1%) and April (7%). It's a step in the right direction, marking the lowest inflation rate for the bloc since the beginning of 2022.
However, the 5.5% rate in June surpassed analysts' expectations of 5.4% and remains far above the European Central Bank's target of 2%. Brace yourselves for a potential rate hike in the upcoming meeting.
Financial markets react accordingly, with the EUR/USD pair making modest gains around 1.1220, while European stocks experience a rollercoaster ride amid the mixed sentiment.
ZAR: WINTER LOADSHEDDING DECREASE IMPROVES OPERATING COSTS, STABILISES FUEL PRICES
After 13 consecutive months above the 6% upper limit, Saffa headline inflation took a downward turn to 5.4% y/y (0.2% m/m).
The significant drop of 0.9 percentage points from May's 6.3% was largely influenced by the continued positive base effects from last year's high inflation. Saffa core inflation followed suit, easing to 5.0% y/y from 5.2% in the previous month.
Additionally, the housing sector played a crucial role in the monthly inflation of 0.4%. Meanwhile, fuel prices experienced a remarkable decline of 3.1% m/m and 8.3% y/y.
Load-shedding has become less severe, providing some relief to businesses and helping to avoid potential increases in operating costs.
The stability in fuel prices between June and July, along with annual deflation, is working in favor of maintaining lower headline inflation. The FNB Economics Commentray team's projections indicate that Saffas can expect inflation to hover around 6.0% this year, with a gradual and sustainable path towards meeting the target over the forecast horizon.
GBP: BoE BEGINS TO BREATHE A BIT EASIER AS INFLATION MAKES A NOTABLE DECLINE
In a much-needed respite, inflation in the UK takes a step back, showing a decline in June, clocking in at 7.9%. This figure marks a significant slowdown, the slowest recorded in over a year, as it falls below both the previous month's 8.7% and economists' projections of 8.2%. While this improvement is commendable, it is essential to address the larger picture—7.9% still significantly overshoots the Bank of England's target inflation rate of 2%.
The financial world is abuzz with anticipation, foreseeing the Bank of England's move in response to this development. On 3rd August, experts predict that the central bank will embark on its 14th consecutive interest rate hike. This strategic decision aligns perfectly with Prime Minister Rishi Sunak's firm commitment earlier in the year, aiming to slash inflation by half before the year's end.
An intriguing aspect behind the decline in the Consumer Price Index (CPI) is the contribution of energy and fuel prices. Their positive influence is crucial, as it brings some much-needed relief to households and businesses. Yet, despite this encouraging trend, it's crucial to acknowledge that some challenges may persist in the months to come.
Economists, however, maintain a positive outlook, holding onto the hope that the deceleration in June's inflation will continue its course into July.
YEN: CHINA'S GROWTH STAGNATING, PROMPTING URGENT POLICY INTERVENTION
Is China's growth losing steam? The signs are clear, and policymakers are feeling the heat.
Recently, Beijing reported a 6.3% GDP growth, missing the mark with just 0.8% growth from the first quarter. To add to the mix, the annual consumer price inflation stayed flat in June due to a significant drop in pork prices.
Top economists from Wall Street giants like Barclays, Citi, Morgan Stanley, and JPMorgan are also scaling back their forecasts for China's annual growth. The euphoria surrounding China's economic recovery post its zero-COVID policy is now giving way to skepticism.
AUS: UNEMPLOYMENT DECLINES, AUSSIE DOLLAR STRENGTHENS CONSIDERABLY
Australia's economic prowess takes center stage once more, celebrating the addition of 32,600 jobs despite facing a challenging interest rate leap. The latest report from the Bureau of Statistics unveils a notable official unemployment rate of 3.5%, a testament to the country's tight labor market, where job creation successfully keeps pace with population growth.
Nevertheless, the plot thickens as this development directly opposes the RBA's daring move of implementing a staggering 400 basis point rate hike. The market can't help but tread carefully, anticipating the central bank's determination to proceed with yet another interest rate increase.
Amidst this dynamic scenario, the Australian dollar springs into action, surging a quarter of a US cent, reaching an impressive 0.6825. This positive movement serves as a strong indicator, fueling the belief in the higher possibility of further rate hikes.
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