Early Morning Call: FTSE 100 suffers another week of losses; GBP/USD weakens

Indices overview

Indices in the Asia-Pacific region fell heavily overnight. In Japan, the Nikkei erased most of the gains recorded the previous week. Price pressure is broadening in the world’s third-largest economy. If Japanese headline consumer price index (CPI) fell to 3.2% year-over-year (YoY), the Bank of Japan's (BOJ) key gauge, the so-called "core-core" index that excludes both fresh food and fuel, accelerated to 4.3% in May; that's a rate not seen since June 1981.

At its next meeting in July, the Bank of Japan is now widely expected to revise up its inflation forecasts. In its last projections made in April, the BOJ expected core consumer inflation to hit 1.8% in the current fiscal year ending in March 2024.

UK inflation

Despite stubbornly high inflation, UK consumer morale keeps improving. The latest GfK consumer confidence survey rose to -24 in June, its highest level since January 2022. This survey doesn’t take into account the Bank of England's (BOE) 50-basis point rate increase announced on Thursday.

And retail sales in the UK declined by 2.1% in May, not as much as expected, as it follows a 3% fall in April.

German economy

Could we see Germany's recession deepen? On Thursday, the country’s bond yield curve inversion widened to the most in three decades. Throughout next week, several macroeconomic indicators will tell us more about the state of the German economy, starting on Monday with the Information and Forschung (Ifo) business climate, expected to marginally fall in June to 91.5.

On Wednesday, Gfk consumer confidence is forecast to rise to -23 in July from -24.2 in June.

The consumer price index will be released on Thursday, followed on Friday by retail sales.

Commodities overview

Crude oil inventories fell by 3.8 million barrels last week, according to the Environmental Impact Assessment (EIA), helped by solid export demand and low imports. US crude oil exports climbed to 4.5 million barrels per day last week, while imports fell about 50%. US gasoline stocks rose by 500,000 barrels, while distillates rose by 400,000 barrels.

The draw in crude oil failed to lift oil prices, which fell steadily throughout Thursday, taking WTI back below $70.

The number of oil and gas rigs in operation fell again last week, according to Baker Hughes. The total rig count fell by eight to 687. The number of oil-producing rigs alone fell by four to 552.