Market news today - a crucial week for US rate decision

IT’S the start of Wimbledon, the British grand slam tennis tournament, in London and it’s also the 75th anniversary of the foundation of the UK’s National Health Service. It is though, otherwise business as usual here, while over in the US, markets will be closed on Tuesday for the annual Independence Day celebrations.

Wall Street will however be open again ahead of the non-farm payroll data which lands on Friday and will be closely watched. The release of this jobs data will be crucial to the Federal Reserve’s deliberations over the July interest rate decision.

US hiring is expected to have slowed in June after two months of unexpected rises that have helped make the case for the Fed to continue increasing interest rates this year.

Fed watchers will get the chance to pore over the minutes from the last rate-setting meeting on Tuesday. The manufacturing numbers from the UK and US among others are out on Monday, followed by services on Wednesday. And these should give us some guidance on the relative performance of large economies, including the G7 nations.

In Asia, better-than-expected data from China in its latest manufacturing purchasing managers’ index seems to have eased investors’ nerves over the potentially sluggish post-pandemic recovery of the world’s second-largest economy.

When it comes to stocks on UK markets, retail is once again a big theme in this week’s earnings reports.

Sainsbury’s, one of the big four supermarkets which was forced to defend itself last week against accusations of profiteering from food inflation, will be updating investors on its first quarter trading on Tuesday. But it’s not off the hook yet when it comes to allegations of profiteering. The competition regulator, the CMA is due to publish its year-long investigation into whether supermarkets and other retailers are taking unfair profit margins from fuel sales. Crucially, giving its verdict on whether, in its view, supermarkets have been profiteering on fuel prices amid the cost-of-living crisis. Back in May, the watchdog said the war in Ukraine didn’t explain the full scale of rising prices at the pump.

What a time then for Gerry Murphy, who has been appointed as the new chair of Tesco to arrive. Replacing former CBI president John Allan, who stepped down amid misconduct allegations at the CBI, City veteran Murphy, who is currently chair of luxury fashion group Burberry and food group Tate & Lyle, certainly takes over at a tricky time for the supermarkets.

Elsewhere in the retail sector, we also get full-year results from online electrical goods group AO World, which has formed a strategic partnership with Mike Ashley’s Frasers Group. And we hear from AO’s competitor Currys on Thursday.

And finally, as Singapore reveals that house prices there have fallen for the first time in three years, there are growing concerns that here in the UK not only do first first-time buyers now have a cat in hell’s chance of securing a mortgage they can afford, but after the Bank of England’s decision to hike the base rate to 5%, there could be a long-range storm brewing for the rest of us.

Financial advisers are warning that steps by banks and building societies to help UK borrowers cut their monthly mortgage payments could just be storing up financial trouble for the future. They warn that homeowners who switch to interest only mortgages or extend their mortgage term now, so they can survive the rate hikes, could very well face a higher total interest bill and end up with a lower income of income in retirement, as a direct result.

The latest UK Halifax House Price Index on Friday will give us a clue as to where property prices might be heading. Cairn Homes gives a first-half trading update on Tuesday and Persimmon updates on trading on Thursday.

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