With the Fed chair’s keynote address at Jackson Hole symposium in the rearview mirror, attention now turns to US inflation for confirmation that interest rates could be heading lower. At the meeting of central bankers, Jerome Powell gave a strong signal that it was time that US interest rates would be cut.
On Friday, the Fed’s preferred inflation gauge, namely, the PCE price index could show that consumer prices are neither falling nor rising. This is unlikely to dissuade the Fed’s rate-setting committee from reducing the cost of borrowing.
The annual PCE inflation rate has come down sharply from over 7% in June 2022 to 2.5% in June 2024. Another month at 2.5% might just be enough to convince the FOMC that the time is right to cut the Fed fund rate.
Elsewhere, India will announce its GDP for the second quarter. The rate of economic expansion is expected to remain strong at 7.1%. But it could be lower than the annualised rate of 7.8% in the first quarter.
On the results front
It could be make-or-break time for the tech sector when NVIDIA (Nasdaq: NVDA) reports second-quarter earnings. It could say that revenue rose 8% from the previous quarter and 100% from the same quarter a year ago. For now, its order book is likely to be full. But at some point in time, its clients could have more AI chips than they need.
A raft of US retailers could shed some light on the spending habits of global shoppers. They include Bath & Body Works (NYSE: BBWI), Victoria’s Secret (MYSE: VSCO), Footlocker (NYSE: FL), Guess? (NYSE: GES),. FL), Guess? (NYSE: GES) and Lululemon (Nasdaq: LULU).
In June, Bath & Body Works warned that revenue could decline 2% in the second quarter. But Victoria’s Secret is expected to deliver sharply higher profit on lower revenue. The opposite could be in store at Footlocker that could deliver a drop in earnings on higher revenue.
Two of Malaysia’s largest banks, namely, Malayan Banking (KLSE: 1155) and Public Bank (KLSE: 1295) are pencilled in for first-half earnings. In May, Maybank posted a rise in first-quarter profit that was driven by higher non-interest income and better investment and trading income. However, Public Bank said first-quarter profit fell 3.5% in the absence of a positive boost from higher interest rates.
Sino Land (SEHK: 0083) will report full-year results. In February, the Hong Kong-based property developer was able to record a small rise in first-half profit even after taking into account revaluation losses on investment properties. It said it has a pipeline of new projects to be launched.
Other companies that are slated for results include Chinese EV makers BAIC (SEHK: 1958) and BYD (SEHK: 1211), hotpot restaurant cghain Haidilao (SEHK: 6862), Chinese E-tailer PDD Holdings (Nasdaq: PDD), and Chinese online travel agency Trip.com (SEHK: 9961).
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Disclosure: Malayan Banking, Public Bank and Sino Land are components of the DKIP real-money portfolios.
