Look Ahead 28/7/23: BoJ; Standard Chartered; NatWest; P&G; IAG; Air France-KLM

(Video Transcript)

Look Ahead: Japan may keep monetary policy on hold

Hello. Welcome to IGTV. This is your look ahead to 28 July 2023. And we start in Japan with yet more central bank action. In case it wasn't already exciting enough with the US Federal Reserve (Fed) and the European Central Bank ( ECB), the Bank of Japan has its interest rate decision and investors are widely expecting the Bank of Japan to buck the global trend and keep monetary policy on hold on Friday.

Just looking at USD/JPY there, because there are a number of investors and market watchers and also investment banks that are warning that we could be in for a shock and, therefore, volatility.

Many central banks, major ones, are coming towards the end of their historically rapid tightening cycles that they unleashed in an effort to curb inflation that erupted in the wake of the COVID lockdowns and after those lockdowns were done with as well.

But the Bank of Japan has largely held firm, happy to see Japan's relatively tame inflation pick up after decades in the freezer. So, it’ll be interesting to see what happens when the Bank of Japan releases its decision later in the session tomorrow.

GDP numbers out in France and Germany

Now, just checking in on France as well, because France is going to be quite topical in the coming session because it's out with its second quarter gross domestic product (GDP) numbers. Just looking at the France CAC 40, the €40 zone bond yields extended their fall this session after the ECB raised interest rates to three and three quarters of a per cent as expected. They raised by 25 basis points.

And, also, the suggestion is that the ECB will continue to keep an eye on data and inflation before deciding any future rate policy. Now traders are waiting for more clues when President Christine Lagarde starts talking.

And, also, we've got Q2 GDP numbers out of Germany as well. Expectations there for a zero 3.3% year-on-year. And we're looking out for the consumer price index as well.

Turning to the US, we've got core personal consumption expenditure (PCE) price numbers after the details from the Q2 numbers and also initial jobless claims were quite robust earlier this session. We're also looking out for the Baker Hughes oil rig count.

And on the earnings front, it's as busy as early in the week. We've got NatWest first half earnings, AstraZeneca and also Standard Chartered handing in their first half report card. Meanwhile, over in Europe, we've got IAG and Air France-KLM also out with first half results and from the drug sector, Sanofi hands in its second quarter numbers from the US.

Look out for P&G

The big one to look out for is Procter & Gamble. It's an old session stock on the big platform like many consumer giants, paying attention to what they say and what Procter & Gamble says about higher costs and how they're pushing through higher prices to cope with these higher costs.

Major consumer goods companies from Nestlé all the way to Procter & Gamble have so far managed to the sharp rises in input costs by passing it on to consumers. However, it remains to be seen for how much longer they can do this.

Last, but not least, we also have a spate of energy earnings out of Chevron second quarter earnings, while ExxonMobil as well out with second quarter numbers.