The week ahead presents surprisingly little in terms of economic data, in both developed and emerging markets. Investors are hoping that this may bring a relief rally to equities given the precipitous drop in values since the May 6th elections in France and Greece.
Emerging markets have held up fairly well in the first quarter and asset prices may see a bump up if sentiment returns to trading on domestic fundamentals rather than European headline risk.
The reprieve may be short-lived however, with flash PMI reports out of France and Germany and durable goods in the U.S. on Thursday. Expectations for French, German, and eurozone PMI numbers are for a basically flat reading over last month. Given the level of negativity priced into the market, the risk is firmly to an upside surprise on flat or stronger numbers. Durable goods orders in the U.S. should rebound off last month’s surprise weakness.
Monday, May 21
Poland has shown a surprisingly resilient economy in the face of larger regional problems. Industrial output is expected to rise to a gain of 2.8% against last month’s disappointing 0.7% gain on a year-over-year basis. A weaker zloty has helped support exports over the first quarter but has strengthened over the last few weeks suggesting a possible soft patch in the second quarter.
Tuesday, May 22
Core consumer inflationary pressures in Poland should come down slightly when reported this week. Expectations are for a gain of 2.3% annualized against inflation of 2.4% reported previously. The central bank unexpectedly raised rates to 4.75% on May 11th against inflationary pressures just above its 2.5% target. With the crisis in the region still far from resolved, most do not expect further policy tightening.
Strong domestic demand helped Russia surprise on its first quarter GDP last week with growth of 4.9%. Retail sales are released on Tuesday with expectations of a slight decrease to 7.1% from last month’s 7.3% year-over-year gain. Domestic consumption was spurred by the strongest real wage gains in four years. The surplus in trade increased by a third, largely due to high oil prices over the quarter. Consumption in the second quarter of the year should remain elevated but risks falling off in the second half due to increased inflation. Oil prices have come down considerably and threaten fiscal budgets and trade.
Reporting earnings on Tuesday are China Digital TV (STV, quote), China Gerui Advanced Materials (CHOP, quote), China Sunergy Co. (CSUN, quote), China Techfaith Wireless (CNTF, quote) and Qihoo 360 Technology (QIHU, quote)
Wednesday, May 23
Malaysia reports first quarter GDP and April consumer inflation on Wednesday. Economic growth in the country is expected to slow marginally to 4.6% against 5.2% annualized growth in the fourth quarter. Consumer prices are expected to remain low, matching last month’s report of a 2.1% gain over the last twelve months. Industrial production slowed to 0.6% in March off a frenzied 8.2% annualized gain in February.
Thursday, May 24
Friday, May 25
The Central Bank of Colombia is expected to leave its overnight rate at 5.25% for the third month after consumer prices were reported to rise for April at a 3.43% pace over the last twelve months. The central bank’s May survey of inflationary expectations reported a moderation in inflation for the year to around 3.25%. The country’s economy grew at a 5.9% pace in 2011, the best in four years, on continued strength in its oil sector. Last week, Ecopetrol (EC, quote) surpassed Brazil’s Petrobras (PBR, quote) as Latin America’s largest petroleum company.