Take Five: dodge the summer squalls | Invest News

LONDON (Reuters) – Below are five events and themes that are likely to dominate global financial markets over the next week.

US consumer price data released on Wednesday will provide answers to one of the most pressing questions in global markets right now: How far is the current spike in US inflation? sustainable?

Last month’s 0.9% jump was the biggest gain since June 2008. May was also quite dynamic at 0.6% and economists polled by Reuters believe July’s figure won’t be far behind, at 0.5%.

The Federal Reserve hawks watch these numbers, well, like hawks. Another hot figure will strengthen their case for the central bank stimulus sooner rather than later. This could cause summer squalls in record stock markets and searing bond markets.

(GRAPHIC – The CPI has jumped in recent months: https://fingfx.thomsonreuters.com/gfx/mkt/mopanmzqxva/Pasted%20image%201628114057120.png)

In March, Morgan Stanley predicted another wasted summer for tourism, surprising some, given the vaccine optimism at the time. Now, in August, when beaches and towns are normally teeming with vacationers, their call seems to be ringing.

Spain received 75% fewer tourists last month than in June 2019. The Greek islands, billed as “COVID-free”, are once again subject to travel restrictions and suffering from forest fires. Phuket in Thailand only has 1% of the visitors it had before the pandemic. Turkey’s tourism revenue in the second quarter was $ 3 billion, up from $ 8 billion in the second quarter of 2019, while Kenya received just 300,000 visitors in the first half, up from 2 million in 2019.

Given that tourism contributes directly to 6% of European GDP and almost 8% of employment, it is not surprising that the expectations index of euro area service companies has fallen to its lowest level in three months and that the share of trips to Europe has lost 13% since April. The Thai baht has fallen to its lowest since 2018. Enough to make you want a vacation.

* Baht tops loss among Asian currencies due to virus issues

* Foreign tourism in Spain increases compared to last year in June, 75% below 2019

(GRAPHIC – Tourist shares: https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgmzeypb/Pasted%20image%201628160517254.png)

Chinese data in the coming days is expected to reveal how much Beijing’s regulatory crackdown, recent flooding in Henan Province, and the new wave of COVID-19 – both at home in and in neighboring countries – are causing the nation. giant economy.

There could be contradictions. There is a slowdown in credit growth due to the repression of indebtedness and local government debt, as well as the slowdown in exports after a record second quarter. At the same time, producer price inflation will be monitored to see if the authorities’ attempts to suppress speculation are having much impact.

The headwinds on growth have stimulated calls for further reductions in reserve requirements and possibly even policy rates, both in China and its neighborhood. Thailand’s tourism-dependent currency is at its lowest in 2018, forcing the Bank of Thailand to become dovish as the Philippines could copy China’s advance on Thursday and reduce its own reserve requirements.

(GRAPHIC – China cracking down on tech, tutoring and property: https://fingfx.thomsonreuters.com/gfx/mkt/byprjorzzpe/techtutoringproperty.jpg)

* Investors dump stocks of alcohol and e-cigarettes in China after criticism from state media * China records highest number of daily coronavirus cases in current outbreak

* UPDATE 3-Indonesia emerges from recession with 7% GDP growth in second quarter, but virus clouds pick up

Have you tried getting COVID insurance and failed? Most of the major European insurers have removed pandemic coverage from their policies, setting them up for much stronger results than last year, when the virus caught them off guard.

The French AXA and the Italian Generali and the German Allianz have already recorded good figures and next week will see the turn of Zurich, the Dutch pair Aegon and NN and the British Aviva, M&G and Prudential.

And it’s not just COVID life insurance from business claims that will be of interest. Activist investor Cevian recently took a 5% stake in Aviva and Prudential is severing its US branch under pressure from another corporate raider, Third Point.

(GRAPHIC – European insurance companies: https://fingfx.thomsonreuters.com/gfx/mkt/klpykerbdpg/Pasted%20image%201628237596921.png)

* Activist Cevian takes Aviva stake and seeks stg 5 billion return on capital

* Axa in France rebounds after the pandemic as the XL unit becomes beneficiary

Zambia will head to the polls on Thursday in what appears to be a close election between incumbent President Edgar Lungu and serial challenger Hakainde Hichilema, known as HH.

Analysts say it will likely be decided by young people and first-time voters frustrated by an economy with the highest unemployment rate in 10 years and skyrocketing cost of living due to the currency collapse.

He is also in default. Debt restructuring was put on hold until after the election, but it is not a simple restructuring. It is supposed to be the first big test of the “common framework” debt relief plan put in place by the G20 countries last year. They need Zambia to be a success for other reluctant countries to follow suit, so whoever wins the election will be firmly in the spotlight.

(GRAPHIC – Zambia bonds rally to IMF hopes: https://fingfx.thomsonreuters.com/gfx/mkt/byvrjoblrve/Pasted%20image%201627905739297.png)

(Reporting by Marc Jones, Sujata Rao and Carolyn Cohn in LONDON, Ira Iosebashvili and Megan Davies in NEW YORK and Vidya Ranganathan in SINGAPORE; Editing by Giles Elgood)

Copyright 2021 Thomson Reuters.

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