The cocoa market is in the spotlight due to the supply crisis and Europe is gearing up for a summer of games with the Euro 2024 tournament in Germany.
1/ The big day
The central banks of Britain, Switzerland and Norway will meet on Thursday.
The Bank of England could dash any hopes of the ruling Conservative Party cutting interest rates before the July 4 election. Markets are now expecting relief sooner rather than later, with a roughly 40% chance of an interest rate hike in the August quarter and a 70% chance in September with wage and services inflation holding steady.
The Swiss National Bank began cutting rates in March. Another cut on Thursday is seen as 50-50 after steady March inflation. Norway, in no hurry to cut rates with core inflation around 4%, releases new economic projections. Australia’s central bank meets on Tuesday and isn’t expected to ease for some time.
After a spree of interest rate hikes in the face of rising inflation, global moves towards rate cuts are slowing.
2/ Sales Report
Investors trying to gauge the strength of the U.S. economy — and the timing of a rate cut by the Federal Reserve, which is no longer expected before September — will look to monthly retail sales data for June 18.
Retail sales are expected to have risen 0.3% in May, after remaining unexpectedly steady in April, according to a Reuters survey of economists.
Consumer spending is one area Wall Street will want to focus on as investors look to assess the impact of higher interest rates on the economy. Data earlier this month showed the U.S. economy created more jobs than expected in May and annual wage growth accelerated again.
However, recent data showed that US consumer prices remained stable in May, as cheap gasoline and other commodities offset the higher cost of rental housing.
3/ Fading hopes
Investors are sitting on the sidelines waiting for a more robust recovery in China, with a particularly troubled property sector casting a dark cloud over growth prospects.
Chinese house price data is due to be released on Monday – the first such data since Beijing announced “historic” steps to stabilise the property market last month, although they have so far had limited impact. May industrial output, urban unemployment rate and retail sales data are also due, with retail sales expected to rise further after April’s disappointment.
Still, recent data underscores the need for more stimulus from policymakers ahead of a decision on the loan prime rate on Thursday.
The trouble has been compounded by soured trade relations, with Europe set to impose additional duties on imported Chinese electric cars.
4/ Bitter sweet
Cocoa prices have again topped $10,000 per metric ton and are headed for all-time highs, as the chocolate industry’s supply crisis worsens amid a global supply shortage caused by adverse weather, long-term underinvestment in cocoa farms and investor speculation.
Top producer Ivory Coast recently halted cocoa exports for June and advance sales for next season. Ghana, second, is looking to delay deliveries of up to 350,000 tonnes of beans for next season because of poor crops.
The price of cocoa has more than doubled this year and is now more expensive than many metals. Chocolate producers are passing the buck to consumers or modifying their products. Fresh produce from countries outside Africa, such as Brazil and Ecuador, will take time to arrive in the market.
5/ Kick off
The UEFA European Football Championship kicks off in Munich on Friday and with 24 teams playing 51 matches over 22 match-days, Cristiano Ronaldo, Kylian Mbappe and Harry Kane are not the only ones hoping to score big goals in Germany.
German beer halls and companies hope fans will drink more and buy bigger TVs. Berlin wants the tournament to provide a boost to its sluggish economy the way the 2006 World Cup did.
Kit manufacturers are leading the way – nearly two thirds of teams are sponsored by Nike and Adidas, including the two big favourites England and France, as well as hosts Germany. Kit deals for France, Germany and England alone are worth more than $150 million.
Here are some statistics to consider: The 2020 final between Italy and England was watched by 330 million people — that’s double the number of people who watched the Super Bowl.
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