The Week ahead – week commencing Monday the 20h of May

The US-China trade war will continue to hang over the markets this week and is forecast to weigh on growth, along with the tech slowdown, when Japan announces its first-quarter gross domestic product figure on Monday.

Central banks The South African Reserve Bank meets on Thursday. Its policy rate was left constant at 6.75 per cent at its March meeting and no adjustment is also expected.

Investors will hope for transparency on how transient the Federal Open Market Committee believes recent weakness in economic activity and inflation to be when the central bank on Wednesday releases minutes of its May meeting.

Committee members elected to maintain rates constant, as proposed, in reply to muted inflation and economic uncertainty.

The Fed has followed a wait-and-see approach to interest rates, and some leaders have indicated they could lower rates if inflation growth does not pick up. Fed chair Jay Powell said during a news conference after the meeting he did not recognise a compelling argument to shift in either direction. The minutes of the ECB’s April meeting is also out on Wednesday.

Economic data: Analysts will on Thursday parse the further detailed issue of German GDP figures after the initial review of the world’s fourth-largest economy earlier this month showed a better than

expected rebound to 0.4 per cent. France, Germany and the wider Eurozone all have purchasing managers’ indices out this week.

In the US there will be fresh data on durable goods orders and sales of both new and existing homes.

UK inflation remained steady during March when consumer prices were 1.9 per cent higher than a year ago, the same as in February. City of London economists had predicted an increase to 2 per cent. This time the estimates are that inflation will rise above the Bank of England’s 2 per cent target.

The UK’s retail sales on Friday could once also be erratic, with the sunny Easter weekend likely to play a part. March’s year-on-year figures were more buoyant but were perceived to be flattered somewhat by fearful consumers stocking up ahead of Brexit.

Other economic reports coming up include Canadian retail sales and the OECD’s economic forecast.