This article first appeared in The Edge Malaysia Weekly on July 29, 2024 - August 4, 2024

The main focus this week will be the US Federal Open Market Committee (FOMC) meeting on July 30 and 31.

Although Federal Reserve chair Jerome Powell signalled at end-2023 that interest rate cuts could happen in 2024, they have yet to occur.

According to a Bloomberg survey, all of the 92 economists polled expect the Fed to hold its rate steady at 5.25% to 5.5%, despite calls for a cut by many Wall Street analysts.

The Fed has maintained its benchmark overnight interest rate in the current range since last July after hiking the rate by 525 basis points since 2022.

It was announced last week that US prices rose moderately in June, underscoring an improving inflation environment that potentially positions the Fed to begin cutting interest rates in September.

The personal consumption expenditures (PCE) price index nudged up 0.1% last month after it remained unchanged in May, the Commerce Department’s Bureau of Economic Analysis said last Friday.

In the 12 months through June, the PCE price index climbed 2.5% after rising 2.6% in May.

Overall, the data indicates that price pressures are subsiding and could help Fed officials meeting next week build more confidence that inflation is moving towards the US central bank’s 2% target. The Fed tracks the PCE price measures for monetary policy.

Additional key US data releases this week include ISM Manufacturing PMI, JOLTs job openings, consumer confidence, factory orders and house prices.

In the run-up to the US’ upcoming 60th quadrennial presidential election, which is set to be held on Nov 5, the Democratic Party must soon decide on a replacement candidate after Joe Biden, the 46th president of the US, announced he would not continue his bid for re-election.

For now, Vice-President Kamala Harris remains unchallenged as the Democratic presidential nominee, with Biden and former President Barack Obama endorsing her as their preferred candidate.

In the US corporate earnings season, big technology stocks Apple Inc, Amazon.com Inc, PayPal Holdings Inc, Meta Platforms Inc, Microsoft Corp, Intel Corp and Advanced Micro Devices Inc are set to announce their latest quarterly earnings this week.

Of the first 74 S&P 500 companies that reported quarterly results during this earnings season, 81.1% beat expectations.

Elsewhere, other major central banks, including the Bank of Japan (BoJ) and the Bank of England (BoE), are expected to release their monetary policy this week.

The PMI by S&P Global report says, the BoE looks set to kick-start its easing cycle in August, with the latest July flash PMI data indicating that selling prices — a good proxy for the Consumer Price Index (CPI) — are increasing at the slowest pace since February 2021.

Meanwhile, the path forward for BoJ appears relatively more uncertain, with the Japanese central bank contemplating a hike.

“The latest au Jibun Bank Flash Japan PMI outlined intensifying price pressures, supporting BoJ’s move, but the uneven growth between manufacturing and services adds to uncertainty over whether BoJ will indeed act at the upcoming meeting,” S&P Global said in a report last Friday.

On the data front, the market will be looking closely at eurozone inflation numbers for July after the latest HCOB Flash Eurozone PMI outlined softening output price inflation amid a fading economic recovery in the region.

Gross domestic product (GDP) numbers will be released on Tuesday for an official early estimate of eurozone growth in the second quarter.

Worldwide manufacturing PMI will be updated at the start of August for insights into conditions in the goods producing sector. In particular, Asian manufacturing conditions will be closely watched after the latest HSBC Flash India PMI showed faster production growth in July.

Official data releases also due from across the region include GDP for Taiwan and Hong Kong SAR.

Back at home, S&P Global Malaysia PMI manufacturing for July is set to be released on Thursday, together with Thailand, the Philippines and Indonesia.

Upcoming listings on Bursa Malaysia will take place only in August: Sik Cheong Bhd on Aug 13; and EPB Group Bhd on Aug 23. Both are slated to list on the ACE Market.

Singapore will announce its PMI data for July and electronic sector index on Friday.

Elsewhere in the region, it will be a busy week in Thailand, with several economic data releases, including trade numbers for June and the Business Sentiment Index. Indonesia will announce its CPI data on Thursday. Bloomberg consensus projects that the country’s July CPI will moderate to 2.4%, from 2.51% in June.

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