June 13 live updates: US stocks enter bear market, UK economy contracts unexpectedly
Prepare to remember past scandals and war, which still resonate today. Tuesday is the fifth anniversary of the fire that engulfed Grenfell Tower in west London, revealing gaps in the building’s cladding and triggering a crisis for apartment owners across the UK that continues to generate repercussions.
It is also the 40th anniversary of the end of the Falklands War, the wounds of which remain fresh in Buenos Aires.
Friday marks half a century since the robbery of the Watergate hotel-apartment-office complex in Washington. Fortunately, this one was resolved more quickly, although it left the irritating legacy of the suffix added to what seems to be every subsequent political scandal.
The latest of these, ‘partygate’, has a way of working, although the main protagonist, British Prime Minister Boris Johnson, will (ironically) be at the center of a legitimate social gathering this week as he turns 58. Saturday.
Partygate spin-off series Are You Being (Poorly) Served is set to see another episode with the government promising to release controversial and long-delayed legislation on Monday to overturn the Northern Ireland Protocol. As my colleague Peter Foster noted in his excellent Brexit Briefing newsletter last week, this is unlikely to end well.
Johnson is also expected to announce a new “growth plan” this week alongside his Chancellor Rishi Sunak. After the OECD’s verdict on UK growth next year – only sanctions-hit Russia is expected to fare worse among G20 countries – the country clearly needs a new plan, otherwise of a new Prime Minister to implement it.
France goes to the polls again on Sunday for the second round of legislative elections. Newly elected President Emmanuel Macron’s concern is not the far right this time but an alliance of the far left.
There will be at least one resolution this week. Colombians will go to the polls on Sunday for the second round of their country’s presidential election, which will decide whether populist Rodolfo Hernández can defeat former leftist guerrilla Gustavo Petro. Whatever the outcome, it will be an interesting contest.
It’s going to be (another) week for interest rate news. The main attraction will be the gathering of the Federal Reserve’s Open Market Committee, but there will also be decisions from the Bank of England and its equivalents in Japan, Switzerland and Brazil.
The question is not whether the tightening of monetary policy will be accelerated but by how much — the answer to this question depends in part on your confidence in the ability of the given economy to achieve a soft landing or whether it is condemned to enter a recession.
Friday’s jump in US inflation fueled talk of a quick tightening. Policymakers have already signaled that, at a minimum, the Fed will proceed with a series of half-point rate hikes. Traders have priced the federal funds rate at around 2.9% by the end of the year, compared to its current target range of 0.75 to 1%. The OECD placed its marker last week ahead of the release of US inflation figures, calling for faster action from the Fed.
Retail is heavily represented in the earnings calendar this week. The main act is Tesco, Britain’s biggest supermarket chain, with watchers keen to hear more about how inflation is hitting household spending. However, just two months after its annual results, few expect the company to deviate from its cautious scenario that this year’s earnings will be held back by the need for buyers to control prices.
I asked FT retail correspondent Jonathan Eley for a view. “The company has gained market share in recent months, but first quarter sales growth figures will be clouded by the closure of pubs and restaurants in the same period a year ago,” he said. . “It boosted supermarket sales, but hurt Booker, Tesco’s wholesaler.”
Among analysts’ comments, Barclays forecast an overall fall of 1.8% in the UK, with lower volumes partially offset by higher prices.
Read the full schedule for the coming week here