Investors continue to weigh up slowing growth concerns and high inflation fears. Growth worries were stoked once again this week as 30% of US consumers in the latest confidence print expect business conditions to worsen into the end of 2022. Inflation fears were also reignited as Spain saw double digit inflation and energy prices still remain elevated. Growth worries continued to weigh on global stocks this week, but China’s 50 index was boosted firmly higher on an improving outlook for China’s economy. The same themes of growth and inflation should remain at the front of investors minds as global recessionary fears are likely to return next week too.

Other key events from the past week

  • USD: Falling consumer confidence, June 29: US consumer confidence dropped to the lowest level in a year as the index decreased from 98.7 from May’s 103.2 reading. Higher fuel and food prices are weighing on the US consumer and increase worries over a coming US recession.
  • China 50: Heading to outperform? June 29: Credit Suisse CIO John Woods keeps outperform rating for China as economic momentum is fuelled by some further reductions in Covid curbs. This supports the China 50 view from March.
  • EUR: Spanish Inflation, June 29: Headline inflation in Spain rose surprisingly high this week at 10.2% in June down from 8.7% in May. The higher inflation print is across the Eurozone the more pressure there will be on the ECB to hike interest rates to bring down record-high inflation levels.

Key events for the coming week

  • China: PMI prints, July 05: Will China’s services PMI data for June show a lift? China’s 50 has moved higher in line with our expectations and a bounce in this data print could lift sentiment again next week.
  • Mighty Microsoft?: Strong summer? Microsoft stock has a very strong period ahead.
  • USD: Service PMI, July 06: The US Services PMI print is forecast to come in at 55.7 next week. Worries over the US consumer started to build this week, so any signs of a services PMI slowdown next week could weigh on stocks as US growth fears will likely amplify.

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