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Week ahead: UK GDP readings, US retail sales and CPIs

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·4 min read
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Display of Stock market quotes. Stock exchange board. Led digital display effect. Vector illustration.
Investors will watch to see any significant rebounds, with strong numbers expected in the UK following the latest stage of lockdown easing. Photo: Getty

Some key GDP and inflation readings are due to dominate headlines in developed markets this week, as the issue of the day continues to be how reopening from coronavirus lockdowns is going. 

Investors will watch to see any significant rebounds, with strong numbers expected in the UK following the latest stage of lockdown easing. 

Many readings are set to be "less bad" than hoped, according to analysts. 

Crypto watchers will also be following news from the weekend, which saw a more than 25% price plunge for joke token Dogecoin, after Tesla (TSLA) boss Elon Musk mentioned it in a TV skit. Volatility has been the name of the game in these markets over the past weeks and months. 

Companies reporting this week

BT Group FY (BT-A.L)

Rolls Royce Q1 (RR.L)

Disney Q2 (DIS)

Doordash Q1 (DASH)

UK: Another GDP estimates, manufacturing production

UK, London, digital composite of modern skyscrapers in the financial district viewed from high up, illuminated at dusk
London's investors will welcome the new mayor, Sadiq Khan. Photo: Getty

In the UK investors will get their first chance to digest local and mayoral election results. There were no big surprises in the capital with the reelection of Sadiq Khan, who retained office by a slimmer margin than expected. 

A new UK GDP estimate for March and Q1 numbers are also on the horizon on Wednesday. Having weathered a lockdown-induced slowdown of 2.2% in January (a number that was better than expected), predictions for the quarter have been revised up twice. 

The Bank of England had predicted a slowdown of 4% in February however since then it has upped its expectations. 

Recent strong PMI data has led to increased confidence of a good reading. 

"In February the monthly GDP numbers saw a 0.4% expansion, raising the prospect of another positive month in March as businesses built up inventory in preparation for the economic reopening in Q2," said Michael Hewson, chief market analyst at CMC Markets. 

"In Q4 the economy expanded by 1.3%, with this week’s preliminary number expected to see a contraction of 1.7%. Monthly GDP for March is expected to see a 1.3% expansion."

Wednesday also brings manufacturing production figures for the UK — a bright spot in otherwise gloomy times. 

The sector has by-and-large managed to bounce back from the initial lockdown and has grown consistently every month since.

The declines a year ago saw a 4.6% decline in March 2020, and a 24.4% decline in April. 

Read more: Bitcoin, ethereum and the blockchain technology behind decentralised finance

US retail sales and CPI readings

WASHINGTON, DC - MAY 7: 
President Joe Biden delivers remarks in the White House east room on the latest jobs report, in Washington, DC. 
(Photo by Bill O'Leary/The Washington Post via Getty Images)
President Joe Biden delivers remarks in the White House east room on the latest jobs report. Photo: Bill O'Leary/The Washington Post via Getty Images

Joe Biden's fiscal stimulus package is one positive indicator ahead of US retail sales data. Jobs numbers will also help buoy this measure.

January saw a $900bn (£644bn) stimulus plan put into action which prompted a big rebound at the beginning of the year. Sales rose by 5.3% to a seven-month high. 

Fresh jitters about new waves of the virus saw a fall of 3% in February. 

The new stimulus payments that were signed off in March of $1.9trn saw another big lift for March consumer spending with the best performance since April last year when the US came out of its first lockdown, rising 9.7%.

Consensus of April numbers is that sales will rise by around 1.1%. 

Read more: Copper and iron ore prices hit record highs amid hopes for global recovery

Alongside this, consumer price inflation is expected to jump around 4%, as prices in a reopening economy are bumped up from a year ago when companies were fighting for survival. 

"These “base” effects should ease as we move through the third quarter, but we continue to believe that inflation could be more persistent than we have seen in previous economic cycles," say analysts at ING. "Commodity prices, freight charges, supply chain disruptions, surging house prices and rising employment costs all factor into our thinking."

Europe: Quiet week expected with CPIs and industrial production data in focus

A quiet week is expected in Europe, as CPIs and industrial production will be the main factors giving a temperature check on the eurozone economy. 

It will be a mixed bag with a smattering of reopenings across the continent alongside some more strict lockdowns. 

Elsewhere: Japanese household spending data is on the slate, alongside Australia's retail sales and New Zealand manufacturing PMIs. 

Watch: What is inflation and why is it important?