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The UK’s Q1 GDP figures are released today, setting the tone for the year to come. Will economists’ optimistic outlines ring true? In the US, retail sales and CPI data reports are due, possibly highlighting potential inflation as the economy surges onwards. Elsewhere, Wall Street braces for another earnings blitz. 

UK GDP Q1 to match optimistic outlook? 

First quarter GDP figures are expected to show a milder contraction than first feared as the country entered a period of lockdown. Last week saw the Bank of England said it expects the economy to have contracted by 1.5% in the first quarter. Nevertheless, the quarterly Monetary Policy Report saw the MPC raise its full-year growth outlook for the UK economy to a full 7.25% increase in GDP. 

This view has been mirrored by economists. Instead of a gloomy portrait, estimates instead paint a sunnier view for UK’s economy. Maybe not golden sunlight uplands just yet, but promising numbers. 

Consensus estimates forecast the drop in GDP to be anywhere between 1 and 2.5%. Barclays, Oxford Economics and ING are cleaving closer to the top end, predicting a 2-2.5% decline. Deloitte, on the other hand, puts the figure at -1.7%. 

We keep banging the vaccine drum, but the impact of the speedy rollout and implementation of a robust nationwide vaccination regime cannot be underestimated. More and more people are heading back to work; lockdown restrictions are lifting; pubs and restaurants will soon be fully open; construction is preparing for double digit growth.  

Indeed, looking to longer predictions, we could be looking at some of the fastest UK GDP growth for 30 years.  

EY ITEM Club’s spring forecast suggests 6.8% annualised growth for the whole of 2021, with the economy returning to pre-pandemic levels by Q2 2022. Goldman is even more optimistic, according to analyst Sven Jari Stehn, with 7.8% forecast. 

Once lockdown lifts fully, and the economy gets back to normal, we’re probably going to see some of the biggest economic expansion figures for decades. It all depends on how successfully the country navigates out of lockdown. 

All eyes on US CPI as inflation stirs 

Inflation could be about to start nibbling at the US economy. March’s CPI data showed a month-on-month jump, so this week’s release charting price rises in April takes on renewed importance. 

Looking at March’s data consumer prices rose 0.6% against February, while they were 2.6% higher than in March 2020. A 9.1% rise in gasoline fuelled the rise in CPI, which was higher than Dow Jones estimated 0.5% monthly and 2.5% annual growth. 

Inflationary pressure on the economy is going to be one to watch going forward. Higher consumer prices could prove a catalyst towards raising the base rate, something which Fed Chair Jerome Powell has so far steadfastly refused to do. At present, the Fed’s strategy is to let the economy “run hot”. 

But still, markets have been pricing in higher growth an inflation across the year so far. Government bond yields have caused a fair few rumbles this year too, with yields reaching some of their highest levels since before the pandemic. Overall, the opening up of the economy, plus major government stimulus, is contributing to an inflationary environment, so the Fed should be watching this month’s CPI data with a keen eye. 

Can April match March’s smash hit US retail sales? 

We’ve seen the US economy step on the gas in 2021, surging 6.4% in Q1. Across the board, the outlook is brighter, if clouded slightly by the shadow of inflation. April’s retail stats will be reported this week, following a blowout in March, but a change in where US consumers spend their cash could be on the way. 

Total US retail sales grew a huge 9.8% month-on-month in March. A combination of warmer weather, lighter lockdowns, and stimulus spending pushed sales higher. Year-on-year growth was colossal, coming in at 30.4%. 

The highest growth areas were sporting goods (23.5%), clothing (18.3%), and motor vehicles (15.1%). 

However, with the economy opening up again, US spenders may turn their attention to other areas. “Experiences” and trips could see large gains this month, as travel restrictions are loosened, while spenders may also start pumping money into hospitality. This could take further cash out of the retail sector, so growth in April may not be as high as March’s terrific performance. 

Earnings season continues on Wall Street 

Wall Street readies itself for a fresh week of large caps sharing quarterly earnings.  

Some titans are reporting in the next earnings season phase. Disney will be one to watch. Parks have reopened, but that will be too late to make any real impact on Q1 earnings. Instead, the focus will be on its Disney+ streaming service, which hoovered up subscribers across the last year. 

Chinese e-commerce behemoth Alibaba’s Q1 earnings will be in focus too. The giant beat estimates by an average of 19.29% across the previous two quarters and could be on track to do so again. Zack forecasts are in the positive, which is normally a good sign for an upcoming earnings beat. 

See below for a round up of large caps reporting this week.  

Major economic data 

Date Time (GMT+1) Currency Event 
Mon 10-May 02.30am AUD Retail sales m/m 
Tue 11-May 10.30am AUD Annual budget release 
Wed 12-May 07.00am GBP Prelim GDP q/q 
 1.30pm USD CPI m/m 
 1.30pm USD Core CPI m/m 
 3.30pm USD US Crude Oil Inventories 
Thu 13-May 1.30pm USD Unemployment Claims 
 3.30pm USD US Natural Gas Inventories 
Fri 14-May 1.30pm USD Retail Sales m/m 
 1.30pm USD Core Retail Sales m/m 
 2.15pm USD Industrial Production m/m 
 3.30pm USD Prelim UoM Consumer Sentiment 


Key earnings data 

Date Company Event 
Mon 10-May Duke Energy Q1 2021 Earnings 
 Air Q1 2021 Earnings 
 Mariott Inc. Q1 2021 Earnings 
 Tyson Foods Q4 2021 Earnings 
 Panasonic Corp. Q4 2021 Earnings 
Tue 11-May Palantir Technologies Q1 2021 Earnings 
 Electronic Arts Q4 2021 Earnings 
 E.ON Q1 2021 Earnings 
 Alstrom Q4 2021 Earnings 
 Nissan Q4 2020 Earnings 
 NAMCO BANDAI Q4 2021 Earnings 
Wed 12-May Toyota Q4 2021 Earnings 
 Allianz Q1 2021 Earnings 
 Deutsche Telekom Q1 2021 Earnings 
 Merck Q1 2021 Earnings 
 Bayer Q1 2021 Earnings 
 Hapag-Lloyd  Q1 2021 Earnings 
 Fujifilm Q4 2021 Earnings 
 Polyus Gold Q1 2021 Earnings 
Thu 13-May Alibaba Q4 2021 Earnings 
 Walt Disney Q2 2021 Earnings 
 Airbnb Q1 2021 Earnings 
 Coinbase Q1 2021 Earnings 
 Petrobras Q1 2021 Earnings 
 Telefonica Q1 2021 Earnings 
 BT Group Q4 2021 Earnings 
 Mitsubishi Q4 2021 Earnings 
 Suzuki Q4 2020 Earnings 
 Rakuten Q1 2021 Earnings 
 Burberry Q4 2021 Earnings 
Fri 14-May Rosneft Q1 2021 Earnings 
 Honda Q4 2021 Earnings 
 UNICHARM Q1 2021 Earnings 
 Knorr-Bremse Q1 2021 Earnings 
 Toshiba Q4 2020 Earnings 

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