5 Risks of Financial Chaos on the Horizon

The unfolding of the summer financial turmoil

The heat of the summer markets may not be over yet and still hold surprises in store.
Investors are closely monitoring at least 5 crucial factors for the upcoming week, with one question in mind: is the financial chaos over?

1.
Summer volatility, how long will it last?

Investors should have realized by now that there is no such thing as a quiet summer in the markets.
The recent events have sparked concerns about the fate of the yen carry trade and the aggressiveness of US interest rates.
With worries about a broader conflict in the Middle East and the upcoming elections in the US, volatility is unlikely to disappear anytime soon.

2.
Coming up: US inflation

Investors are gearing up for the US consumer price data next Wednesday to understand how inflation is progressing in the world’s largest economy.
A weak report could reinforce concerns about recession, potentially triggering new market volatility.

3.
Japan in the spotlight

This Thursday, Japan will release preliminary data on second-quarter growth.
Analysts will closely watch these figures following the recent rate hikes by the Bank of Japan, which triggered a sell-off in stocks.

4.
Delicate balance in the UK

After the UK’s decision in July to cut rates to 5.0%, the Bank of England will have new data to analyze.
Markets are already anticipating a one percentage point rate cut in the next nine months.

5.
European earnings

European stocks, down about 5% since the beginning of the month, are seeing a positive side in corporate earnings.
Second-quarter earnings are expected to increase by 3.8% compared to the same period last year, marking the first quarterly increase since Q1 2021.

This earnings season suggests signs of consumption slowdown but strong growth in the financial, energy, and utility services sectors have helped offset weaknesses elsewhere.