Investing.com - Escalating trade rhetoric will keep investors on their toes in the week ahead, as they watch further developments in the ongoing trade war between the United States and China.
Trade-war fears have been simmering for months, keeping market gains in check with investors jittery over the prospects of further escalation in tensions between the world's two largest economies having an impact on economic growth.
There are also about 40 S&P 500 companies reporting earnings in the week ahead on Wall Street, as the earnings season starts to wind down.
On the data front, global financial markets will focus on this week's U.S. consumer price data, which should give clearer signs on the pace of inflation and fresh hints on the frequency of Federal Reserve rate hikes through the end of the year.
Elsewhere, market participants will also be looking ahead to monthly trade figures out of China to see if the recent trade dispute with the U.S. had any impact on exports and imports in July.
In Europe, market players will look ahead to a preliminary reading on British growth data for further indications on the continued effect that the Brexit decision is having on the economy.
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. U.S.-China 'Trade War' Developments In Focus
Market focus is largely attuned to the next potential steps in the tit-for-tat trade dispute between the U.S. and China after the Asian nation said Friday it was preparing retaliatory measures against U.S. tariffs, targeting $60 billion worth of U.S. goods with import duties of between 5% and 25%.
The response follows the Trump administration's proposal Thursday of a 25% tariff on $200 billion worth of Chinese imports.
Neither side is showing any signs of backing down, fueling worries that world's two largest economies are spiraling towards a trade war that could shake the global economy.
The Chinese government's top diplomat, State Councilor Wang Yi, said on Saturday the response by Beijing to U.S. trade measures were necessary and legitimate.
Meanwhile, President Donald Trump, in a series of tweets on Saturday, said that his strategy of placing steep tariffs on imports of goods from China is "working far better than anyone ever anticipated," citing steep losses in China's stock market.
Trump also claimed that China was talking to the U.S. about trade, but he provided no details.
The U.S. and China have already implemented tariffs on $34 billion worth of each others' goods in July. Washington is expected to soon impose tariffs on an additional $16 billion of Chinese goods, which China has already said it will match immediately.
Investors fear an escalating trade war between the world's two biggest economies could hit global growth and damage sentiment.
2. Earnings Season Starts To Wind Down
About 40 S&P 500 companies are due to report financial results this week, in what will be the last big wave of the second-quarter earnings season.
Weight Watchers (NYSE:WTW), Etsy (NASDAQ:ETSY), Tyson Foods (NYSE:TSN), Turtle Beach (NASDAQ:HEAR), Twilio (NYSE:TWLO), Hertz Global (NYSE:HTZ), Marriott (NASDAQ:MAR), Newell Brands (NYSE:NWL) and Zillow (NASDAQ:ZG) are on the agenda for Monday.
Results from Disney (NYSE:DIS), Snap (NYSE:SNAP), Office Depot (NASDAQ:ODP), Crocs (NASDAQ:CROX), Wendy’s (NASDAQ:WEN), Papa John's (NASDAQ:PZZA), Dean Foods (NYSE:DF), and Match Group (NASDAQ:MTCH) will capture the market's attention on Tuesday.
Roku (NASDAQ:ROKU), CVS Health (NYSE:CVS), Michael Kors (NYSE:KORS), 21st Century Fox (NASDAQ:FOX), NY Times (NYSE:NYT), Yelp (NYSE:YELP), Weibo (NASDAQ:WB), Sina (NASDAQ:SINA), NetEase (NASDAQ:NTES), Monster Beverage (NASDAQ:MNST), Keurig Dr Pepper (NYSE:KDP), Mylan (NASDAQ:MYL), Sarepta Therapeutics (NASDAQ:SRPT), Nektar Therapeutics (NASDAQ:NKTR), and Liberty Media (NASDAQ:FWONA) report results on Wednesday.
Thursday sees Viacom (NASDAQ:VIA), News Corp (NASDAQ:NWSA)., Dropbox (NASDAQ:DBX), Canada Goose (NYSE:GOOS), Trade Desk (NASDAQ:TTD), Universal Display (NASDAQ:OLED), Planet Fitness (NYSE:PLNT), and Norwegian Cruise Line (NYSE:NCLH) post earnings.
Finally, Applied Industrial Technologies (NYSE:AIT) is among the few reporting on Friday.
3. U.S. Inflation Data
The Commerce Department will publish July inflation figures at 8:30AM ET Friday, which should lend further support to the notion that inflation has returned to the Fed’s target.
Consumer prices are expected to have risen 0.2% last month and 3.0% over the prior year, according to estimates.
Excluding the cost of food and fuel, core inflation is projected to climb 2.3% on a year-over-year basis.
Besides the inflation data, this week's rather light economic calendar also features reports on producer prices on Thursday.
The Fed kept interest rates unchanged last week, as expected, characterizing the U.S. economy as strong and staying on track to increase borrowing costs in September and likely again in December.
4. China Trade Figures
China is to release July trade figures on Wednesday morning.
The report is expected to show that the country’s trade surplus narrowed to $39.1 billion last month from $41.6 billion.
Exports are forecast to have climbed 10.0% from a year earlier, while imports are expected to rise 17.0%.
In addition to the trade data, the Asian nation will publish a report on foreign exchange reserves on Tuesday, followed by data on consumer and factory inflation figures on Thursday.
Recent data has started to show that the world’s second largest economy may be losing steam, raising concerns about the potential fallout from a full-blown U.S.-China trade war.
Market players will also watch the yuan after it slumped to 14-month lows against the dollar late last week (USD/CNY).
The ongoing weakness in the yuan has prompted speculation that policymakers in Beijing are allowing their currency to weaken in order to offset the impact of U.S. trade tariffs.
5. UK Preliminary GDP
Market players will focus on the first estimate of British second-quarter GDP for further hints on the health of the economy.
The report, released by the Office for National Statistics at 0830GMT (4:30AM ET) on Friday, is forecast to reveal the economy grew 0.4% in the April-June quarter, after expanding at a 0.2% clip in the previous three-month period.
On an annualized rate, the British economy is expected to grow 1.3% in the three months ended June 30, a tad faster than the 1.2% clip in the preceding quarter.
The Bank of England raised interest rates last week, but signaled it was in no hurry to lift them further as Britain heads for Brexit next year with no clear plan for leaving the European Union.
With less than eight months until Britain leaves the EU, the government has yet to agree a divorce deal with Brussels and has begun talking more publicly about the prospect of leaving the bloc without any formal agreement on what happens next.
Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/