Lawmakers in the U.S. Senate will resume contentious talks on a new coronavirus-aid bill next week as the U.S. economy approaches a critical stage in the recovery from the pandemic.
Extended unemployment benefits for the approximately 32 million Americans out of work are due to end on July 31. The expiration of the Federal program will leave millions of gig workers and the self-employed among others, who do not qualify for regular state unemployment insurance, without an income.
On Thursday, Senate Democratic leader Chuck Schumer unveiled a $350 billion investment plan, but Republicans have said they hope the final package will not cost more than $1 trillion.
The second-quarter earnings season is on course to see the largest drop in profits since the fourth quarter of 2008 according to data from S&P Dow Jones Indices, but investors are hoping that results from Tesla, Intel, and Microsoft could offer some cheer this week.
Tesla, which has seen a strong rally this year, is due to report its latest quarterly earnings on Wednesday. Tech giant Microsoft reports results Wednesday, followed by Intel on Thursday, with both seen likely to have benefited from remote working trends during the pandemic.
Other big names reporting this week include United Airlines, Southwest Airlines, Twitter, Snap, AT&T, Verizon, and Chipotle Mexican Grill.
Besides, with renewed economic shutdowns in California, Florida and Texas market watchers will be paying close attention to Thursday’s data on initial jobless claims.
Economists say unemployment remains uncomfortably high because of the second wave of layoffs, which could intensify as the resurgence of the virus depresses demand and increases bankruptcies, especially in the retail sector.
In the euro zone, leaders are still trying to hammer out a deal on a possible recovery fund worth 750 billion euros. German Chancellor Angela Merkel warned that European Union leaders may not reach a deal on a coronavirus stimulus plan on Sunday as marathon negotiations ran into a third day and tensions mounted over the demands of wealthy but more frugal member states.
Failure to come together amid unprecedented health and economic crisis would raise serious questions about the continued viability of the bloc, officials and experts say.
While it’s possible that a deal could be reached this week it’s more likely that at least one more summit will be needed before an agreement is struck.
PMI figures from Germany, France, the euro zone and the UK on Friday will provide more insight on the strength of the post lockdown economic rebound in July.
Also interesting will be retail sales data in the UK, and the June trade balance in New Zealand and Switzerland. The unemployment rate and a decision on interest rate changes are expected to be published in Russia next week. As for South Korea, the second-quarter GDP figure will be published.
In addition, the results of a business survey in France will be important. The world’s fourth-largest economy has surveyed 4,000 business leaders. In Italy, a survey was conducted on the level of business and customer confidence, the results of which should also be expected in the upcoming week.
