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Declining German inflation, alongside lower prints in France and Spain, will encourage the European Central Bank to go ahead with its next interest-rate cut in September, Berenberg economist Felix Schmidt says in a note. Given the pace of the slowdown, and continued price pressures in the services sector, the ECB will likely pause in July, and hold off rate cuts after September given that base effects could temporarily lift inflation later this year, he says. Some of the inflationary effect in June could be thanks to the Euro 2024 soccer tournament, if judged by data from Germany's largest state North-Rhine Westphalia, where prices for overnight stays jumped 1.9% on month, while alcoholic drinks increased 1.0%. But this effect will likely prove temporary, Schmidt adds. ([email protected])
The second-quarter earnings season looks set to be one of contrasts for advertising groups, with France's Publicis Groupe expected to beat peers and the U.K.'s WPP facing risk of a guidance cut, Bank of America analysts Adrien de Saint Hilaire and David Amira say in a research note. Investors' focus will be on the industry's organic revenue growth in the second quarter and on possible implications for the outlook in the second half and the year as a whole, BofA says. Data on U.S. consumers--often a bellwether for the industry--have been mixed recently, BofA says. "While overall [like-for-like] growth should have slightly ticked up from 1Q, we continue to see great dispersion within the group," the analysts say. Publicis shares rise 2.2%, while WPP trades 0.1% lower. ([email protected])
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