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The Week Ahead: US CPI, JPMorgan, Citigroup earnings

The Week Ahead from CMC Markets: Our pick of the key upcoming economic and company events to watch.

Welcome to Michael Kramer’s pick of the top three market events to look out for in the week ahead.

The week commencing 8 July marks the start of US earnings season, as US banks start to report results on Friday. Additionally, US Federal Reserve chair Jay Powell will present his testimony before the US Congress, on Tuesday and Wednesday. Powell is likely to continue to indicate that the committee is seeking further confidence in the path of inflation before the Fed begins to cut US interest rates. His testimony isn’t expected to differ much from his remarks at the ECB forum in Sintra last Tuesday (2 July).

US consumer price index

Thursday 11 July

The US consumer price index (CPI) reading for June is expected to show a modest increase, rising by just 0.1% month-on-month, up from 0.0% in May, while increasing by 3.1% year-on-year, down from 3.3% in May. Core CPI is anticipated to rise by 0.2% in June, consistent with May, remaining at 3.4% year-on-year. June’s producer price index (PPI) will follow on 12 July and is expected to increase by 0.1% m/m, up from -0.2% in May, with core PPI rising by 0.1% m/m, up from 0.0%.

The US Dollar Index has been compressing in a symmetrical triangle for several months, with the trading range shrinking. The upcoming CPI data could be weak enough to prompt the market to worry about factors beyond inflation data, or it could be stronger than expected. Either way, the dollar indicates that the time is approaching for a significant move, through a substantial increase, or a material breakdown. Until 104.50 or 106.25 is breached, the dollar may continue to consolidate. Once this period ends, it should provide insight into the future of the euro and the pound.

JPMorgan earnings

Friday, 12 July

JPMorgan is expected to report that its second-quarter earnings fell by 1.9% year-on-year to $4.29 per share, while revenue grew by 6.8% year-on-year to $45.27bn. The revenue surge is expected to be driven by a 2.2% increase in trading revenue to $7.1bn, while net interest income grows 4.5% to $22.8bn. The earnings release isn’t expected to generate much volatility, with the implied move following results pricing at just 2.8%, placing the shares between $202 and $215, based on its price of $208.69 on 3 July.

When the company reported its Q1 results in April, the stock fell by more than 6%, breaking a significant uptrend. Since then, the shares have rallied and become overextended, with the stock climbing above the upper Bollinger Band and the relative strength index showing a bearish divergence. These conditions suggest that the recent rally could be running out of steam, which could potentially lead to a reversal down to support at the 20-day simple moving average of $198, following the results.

Citigroup earnings

Friday, 12 July

Citigroup is expected to report that earnings grew by 3.6% to $1.42 per share in its second quarter, while revenue rose by 3.6% to $20.1bn. Most of the growth is expected to come from its US personal banking unit, with revenue projected to grow by 10.8% to $5.1bn, while its trading units are expected to decline by 1.3% to $4.8bn. The stock is only expected to see a mild impact following the results, with an implied move of just 3%, placing it in a range of $62.5 to $66.5.

Citigroup's stock fell by about 6% in April over three days following its Q1 results. Unlike JPMorgan, Citigroup's stock has since traded sideways, and is now attempting to break out of a trading range. If it can clear resistance between $64.50 and $65, it could target $69. However, a failure to do so might mean a pullback towards $57.

Key economic and company events

Here’s our rundown of notable economic announcements and company reports scheduled for the coming week:

Monday 8 July

  • Germany: Retail sales (June), trade balance (June)

Tuesday 9 July

  • US: Testimony of Federal Reserve chair Jay Powell
  • Results: Vistry Group (Q2)

Wednesday 10 July

  • China: Consumer price index (June)
  • New Zealand: RBNZ interest-rate decision, monetary policy statement
  • Results: Manchester United (Q3)

Thursday 11 July

  • China: Consumer price index (June), producer price index (June)
  • Germany: Consumer price index (June)
  • UK: Gross domestic product (May), industrial production (May), trade balance (May)
  • US: Consumer price index (June)
  • Results: Conagra Brands (Q4), Delta Air Lines (Q2), John Wood Group (HY), PepsiCo (Q2)

Friday 12 July

  • Germany: Retail sales (May)
  • US: Producer price index (June), University of Michigan consumer sentiment survey (July)
  • Results: Citigroup (Q2), JPMorgan (Q2), Wells Fargo (Q2) 

Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.

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