Key week for investors following flare up of Delta variant cases

Sun, 15 Aug, 2021 - 21:30

Investors around the world are in alert this week for the potential damage the flare up in cases of the Delta variant could bring to the global economy.

China is dealing with its most widespread Covid outbreak since its initial cases in 2020, with lockdowns striking a blow to consumption growth just as exports slow, and while flooding and chip shortages weigh on industry.

How that affects the economy will start to become clearer when July industrial output and retail sales data are released.

China’s factory production was faced with multiple constraints in July, with shocks from heavy rain and floods, chip shortages, faltering demand, and environmental curbs.

Meanwhile in the UK, another upside surprise in consumer price gains this week will cement expectations that the Bank of England is likely to start raising interest rates as early as 2022. Economists expect inflation to moderate in July, a blip on the way to peaking well above the Bank of England's 2% target later this year.

In the US, investors will be eyeing the latest retail sales data on August 17 to see if consumer demand remains strong and if the shift in spending to services from goods continued in July. Other US reports due include those on business inventories, industrial production, housing starts, and weekly jobless claims.

The US Federal Reserve will likely lift its zero-interest rate policy next year as the impact of the fast-spreading Delta variant has not been that significant on the economy, former Fed vice chair Alan Blinder told Japanese wire service Jiji Press on Sunday, August 15.

Meanwhile, the Biden administration is working on a plan to offer coronavirus booster shots as early as October, The New York Times reported.

The viral wave that has recently struck young people in the US has ensnared the country’s elderly population, with hospitalisations among seniors in some hot-spot states nearing their previous peaks.

Russian deaths from the pandemic hit a record, as cases in Germany rose the most since May.