Early Morning Call: Supermarket price inflation slows in June, food inflation still up YoY

US equity markets

US equity markets fell on Monday, led by technology stocks. Amazon, Nvidia, and Meta fell in excess of 3%. Tesla was among the worst performers after Goldman Sachs downgraded the stock to neutral.

Global consulting firm AlixPartners released its 2023 Global automotive outlook. The auto industry must "radically" change if it wants to compete with Chinese players, according to the report, Chinese brands are "poised to become the shaping force of the global automotive industry in the coming years."

UK inflation

Last week, the Bank of England (BOE) surprised investors by raising interest rates by 50 basis points, taking its main rate to 5%. The argument was simple: Britain is facing stubbornly high inflation that will take longer to fall. Since then, Reuters has run a poll and the verdict is that a majority of economists now think the Bank of England will deliver a further 50 basis points during the next quarter, in the form of two hikes of 25 basis points each at its August and September meetings. In a previous poll made only two weeks ago, policymakers were expected to draw a halt at 5.00% next quarter.

Canadian consumer price index

In Canada, the consumer price index (CPI) is expected to rise 3.4% in May year-over-year (YoY) after a 4.4% increase in April. Core CPI is also forecast to decelerate to 3.9%, which is higher than the headline figure, signalling that broader inflation is taking more time to cool down. Which is a point that really preoccupies the Bank of Canada.

At its last meeting, Tiff Macklem's team unexpectedly raised the target for its overnight rate by 25 basis points to 4.75%. Policymakers were then concerned that inflation could get stuck materially above the 2% target and said they would continue to assess the dynamics of core inflation.

Cruise Line

Will Cruise Line carnival's shares recover on the London stock exchange on Tuesday? Cruise Line operators suffered a loss of value on Monday after Carnival forecast third-quarter profit largely below estimates. These disappointing expectations are not due to a drop in demand but to stickier-than-expected inflation. Port expenses, freight, crew travel, and elevated labour costs have all pushed the company to raise its cost outlook. Norwegian Cruise Line's stock fell as much as 6.4%. Carnival's US stock ended well off the lows, and Royal Caribbean Cruises also recovered.

Walgreens Boots Alliance

Walgreens Boots Alliance is due to report its quarterly earnings before the market opens. The Street expects earnings of $1.07 per share on revenue of $34.2 billion. Investors are waiting for an update on the future of Boots. It all started three months ago, when it was reported that investors and board members were pushing for a breakup of the global pharmacy business to refocus on the group's domestic market. Boots have had a number of owners through the years.

It was established in 1849 and has been part of Walgreens since 2012. This would be the second time Walgreens has tried to sell the UK chain. It tried 18 months ago, with a price tag of $7 billion, but the sale was called off in June last year after failing to find a suitable buyer.