The Week Ahead: Apple faces its big AI moment; OPEC to hike output, ECB to hike rates and US inflation set to climb

The European Central Bank is all but certain to raise interest rates on Thursday to combat rising inflation; but will this kick of a broader round of tightening by global central banks? US inflation data (Wed) could give the market a ready on what the Federal Reserve will do at its next meeting, while the UK’s latest GDP report (Fri) is going to provide a clue as to whether the Bank of England will turn hawkish later this month. Meanwhile we kick the week off with an OPEC meeting (Sun) and Apple developer conference (Mon).

Here’s the key events to watch over the next week.

Sunday, 7 June

OPEC meets for the first time without the United Arab Emirates, with the cartel and its allies in OPEC+ set to approve a further output hike despite the disruption in the Strait of Hormuz. The seven remaining OPEC members are likely to agree an increase of 188,000 bpd for July, the same as the hike agreed for June. However, the ongoing disruption in the Middle East means that in reality output has plunged due to export cuts by Gulf nations, down to an average 33.19 million bpd in April versus 42.77 million in February, according to OPEC’s own data.

Monday, 8 June

Apple faces a crucial AI test at the annual Worldwide Developers Conference (WWDC), where investors expect a major Siri and AI upgrade that could shape the next leg of the iPhone cycle. Apple is expected to unveil the much-anticipated overhauled, conversational Siri powered by Google Gemini – a key moment to see if it can keep pace with rival big tech companies in the AI arms race. Charu has more on this here.

The trading week kicks off with a fairly light economic calendar with just the Japan final GDP and prices index ahead of German factory orders and the Sentix investor confidence report. 

Tuesday, 9 June

On the economic front there is the UK BRC Retail Sales Monitor and Australia’s Westpac Consumer Sentiment report overnight. The European session kicks off with German industrial production and trade data before the US ADP weekly employment report and trade data.

Wednesday, 10 June

US inflation data for May is the major risk event of the week as it will shape how quickly the Federal Reserve is likely to pivot away from its easing bias. The April print rose to +0.6% for the month, pushing annual CPI inflation to +3.8%. Core CPI rose 0.4% for the month and +2.8% year-on-year. For May, the headline rate could rise +0.3% on the month for a +4.2% annual rate, while core is seen at +0.5% for the month and +2.9% annually. I had a look at what the new Kevin Warsh Fed might look like here.

Meanwhile the Bank of Canada is expected to leave rates on hold at 2.25%. Since the last meeting in April core inflation and GDP have been a little softer than expected, which may see the central bank opt for a slightly less hawkish view.

Oracle reports its Q4 earnings. 

Thursday, 11 June

The European Central Bank is all but certain to raise interest rates – the real question is whether it offers up any guidance on what it might do thereafter. The current setup suggests a limited inflation impulse – this is not 2022 again – so there is a chance it’s one-and-done from the ECB. However, it's also likely the ECB wants to lean against any chance of second-round inflation effects by signalling a willingness to hike again, leaving another in September on the table without making this a precommitment. There is not a lot more data before the July meeting and it doesn't need to move all that quickly - the starting point then was -0.5% on the main policy rate, not the 2% this time. June's economic projections from the ECB staff will also support the case for hikes by revising up inflation forecasts - likely up to around +2.9% this year from a prior forecast of +2.6%. But as long as a US-Iran peace deal is in the offing the market won't want to price in too aggressive a hiking cycle.

There is more inflation data from the US with the produce price index. A month ago a hotter-than-expected PPI sparked a move in bond markets as yields began to rise. US PPI inflation print came in at +1.4% month-on-month vs +0.5% expected for April, well above the upwardly revised +0.7% rise in March, with the April increase the largest advance since rising 1.7% in March 2022. Core PPI rose to +1% vs +0.4% expected, with final demand year-over-year at +6.0% vs +4.9% expected. 

Adobe is due to report earnings.

Friday, 12 June

The week rounds out with a look at the latest monthly GDP report for the UK, which will offer some further clues about the extent to which the Iran war is hurting consumer demand. Final CPI data from Germany and France are due up, whilst the US session will look to the preliminary UoM consumer sentiment and inflation expectations reports.