Wall Street has recorded modest gains after a surprise rebound in US retail sales, while Europe’s main indices are all in the red. The Dow Jones was 0.55% ahead but has just turned negative, while the Nasdaq has gained 0.2% and the S&P 500 is trading 0.21% higher.

A closely watched survey, the University of Michigan’s US consumer sentiment index, has weakened to a five-month low in July.

US retail sales rose 0.6% in June, versus expectations of a 0.4% drop, although May’s decline was revised to show a bigger fall of 1.7%, according to figures from the Commerce Department. Americans spent more on electronics, clothes and eating out.

In the eurozone, inflation dipped to 1.9% in June from 2% in May, according to Eurostat, easing inflation fears. By contrast, US inflation hit a 13-year high of 5.4%, as reported two days ago. The eurozone’s trade surplus declined in May due to a fall in exports.

New car sales in the European Union climbed 10% in June from a year ago but remained below pre-pandemic levels, industry figures showed.

The Bank of Japan kept monetary policy unchanged but downgraded its growth forecast to 3.8% for the current fiscal year to March 2022, from 4% in April. It stuck to its view that the world’s third-biggest economy is headed for a moderate recovery, and raised its growth forecast for next year to 2.7% from 2.4%.

The BOJ also revised its consumer inflation forecast higher, to 0.6% from 0.1% this year, on the back of rises in energy costs and commodities prices.

Our main stories today:

Rishi Sunak is considering pushing the budget into next year so the Treasury can weigh up the economic impact of ending the furlough scheme and the third wave of the pandemic over the coming months, reports our economics editor Larry Elliott.

The chancellor is planning to tell MPs before next week’s parliamentary recess that he will hold a three-year spending review in the autumn but he is thinking about delaying tax measures until the spring, government sources have confirmed.

GlaxoSmithKline is seeking to create a £400m campus in Stevenage for new life sciences companies that it believes could result in up to 5,000 jobs over the next decade, reports Mark Sweney.

The luxury fashion retailer Burberry has reported a rebound in sales to pre-pandemic levels driven by a boom in younger shoppers, with products including leather goods, jackets and shoes proving particularly popular, report Mark Sweney and Sarah Butler.

Families are being warned of potential school uniform shortages as the supply of blazers and PE kits is interrupted by coronavirus-related production and transport delays, writes our consumer affairs correspondent Zoe Wood.

The school uniform market is the latest to be hit as the flow of goods into UK retailers is affected by disruption in overseas factories and a shortage of shipping containers, together with the fallout from Brexit.

The specialist retailer School Uniform Direct, which supplies more than 100 UK schools, has written to thousands of customers urging them to place their orders by the end of this month, so it can “resolve any major setbacks with stock”.

Nightclubs admit confusion over UK Covid rules as ‘freedom day’ nears, reports our arts and culture correspondent Lanre Bakare.

Thank you for reading. We’ll be back on Monday. Have a great weekend! Bye – JK

A closely watched survey, the University of Michigan’s US consumer sentiment reading for mid-July, has come in at 80.8, below forecasts of 86.5, and down from a previous reading of 85.5.

Adam Button at Forex Live has summed it up:

• Prior was 85.5
• Current conditions 84.5 vs 91.4 expected (88.6 prior)
  
• Expectations 78.4 vs 85.0 expected (83.5 prior)
  
• 1-year inflation 4.8% vs 4.2% prior
  
• 5-10 year inflation 2.9% vs 2.8% prior

“This indicator is struggling to get anywhere near pre-pandemic levels.”

On Wall Street, shares have opened higher, boosted by gains for banks, energy and travel stocks, following the surprise rebound in US retail sales in June.

• Dow Jones up 87 points, or 0.25%, at 35,074
• S&P 500 up 14 points, or 0.3%, at 4,374
• Nasdaq up 58 points, or 0.4%, at 14,601

NEWSFLASH: US retail sales rose 0.6% in June from May, far better than the 0.4% drop economists had expected.

European stock markets are pretty steady while US Treasury yields are hovering near five-month lows ahead of US retail sales figures for June, out in an hour’s time. The yield, or interest rate, on the 10-year US Treasury is at 1.324%, still near the five-month low of 1.25 touched last week.

This week, the Federal Reserve chair Jerome Powell reiterated that rising inflation is likely to be temporary and that the American central bank would continue to support the economy. However, US Treasury Secretary Janet Yellen said inflation risks need to be watched “very, very carefully” after data on Wednesday showed the biggest jump in consumer prices in 13 years. The annual rate rose to 5.4% in June, the highest since August 2008.

The UK’s FTSE 100 index is 7 points higher at 7,019, a 0.1% gain. Italy’s FTSE MiB has also edged up 0.1%, while Germany’s Dax is flat and France’s CAC has slid 0.5%. US stock market futures are pointing to a slightly higher open on Wall Street.

Oil markets are on course for their biggest weekly drop since at least May, with traders betting that supply from Opec producers could rise to keep pace with rising demand, as economies around the world recover from the pandemic. However, the rapid spread of the Delta variant, particularly in Africa and parts of Asia, is worrying investors.

Brent crude, the global benchmark, is 0.1% lower at $73.38 a barrel.

Deutsche Bank analyst Craig Nicol said:

The spread of the more infectious Delta variant is the key emerging threat for the time being, with Covid-19 cases on the rise again at the global level and in most of the G-7 economies.

As exports jumped, Spain recorded a trade surplus of €140m in May, up 12.6% from a year earlier, according to customs trade data released by the Spanish ministry for trade and tourism.

Exports grew 55.3% year-on-year to €27.2bn, a record high for the month of May. Imports grew at a similar rate, by 55.6%, to €27.1bn.

Spain said its export growth rate in May was greater than that in France (43.1%), Germany (36.4%) and the United Kingdom (28.3%).

For those who can hablar español...

Inflation in the eurozone slowed in June after a pick-up earlier in the year, Eurostat confirmed today, while the bloc’s trade surplus declined in May due to a fall in exports.

Consumer prices in the 19-nation single-currency bloc rose 1.9% in June year-on-year, slightly less than May’s annual rate of 2%, confirming an initial estimate released by the EU’s statistics office. Elsewhere, inflation has accelerated considerably, for example in the US where the annual rate hit 5.4% in June, a 13-year high.

Core inflation in the eurozone, which excludes volatile unprocessed food and energy, was stable at 0.9% in June. A narrower measure, which also strips out alcohol and tobacco prices, was also confirmed at 0.9%%, slightly lower than May’s 1%.

The European Central Bank expects inflation to go up later in the year, but is prepared to see through this as it would be mainly due to one-off factors as the global economy rebounds from the worst stages of the Covid-19 pandemic a year ago. So policymakers are expected to keep borrowing costs ultra-low for years to come.

In a separate data release, Eurostat said the eurozone’s trade balance in goods with the rest of the world recorded a surplus of €7.5bn in May, down from April’s €10.9bn.

GSK has unveiled ambitious plans in Stevenage where it wants to turn its 92-acre research & development site into one of Europe’s largest clusters for biotechnology start-ups and other early-stage life sciences companies, creating up to 5,000 new jobs.

Britain’s second-biggest drugmaker is looking to sell 33 acres of land and attract up to £400m investment from a developer to build out the campus, over the next five to 10 years.

GSK’s Stevenage site is one of its two global R&D hubs, and is already home to the UK’s largest cell and gene therapy cluster, the third largest globally. If successful, the new campus could attract several world-class research organisations to Stevenage.

The new campus would sit next to GSK’s existing research centre at Stevenage and the company hopes that work on a master plan could begin next year.

Tony Wood, senior vice president of medicinal science & technology at GSK said:

The past 18 months has shown the UK life sciences sector at its best and the UK has recently unveiled an ambitious 10-year vision for the UK life sciences sector. Our goal is for Stevenage to emerge as a top destination for medical and scientific research by the end of the decade. We are excited to find a development partner to realise our vision to foster the next generation of world-class scientists and biotechnology firms in Britain.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

EU car sales rose 10% in June, and were up 25% in the first half compared with the same period in 2020, according to the European Automobile Manufacturers’ Association (ACEA). Sales reached almost 5.4m vehicles – still 1.5m units below the pre-Covid volume recorded over the first six months of 2019.

Germany posted the biggest gain with a 24.5% increase, followed by Spain (+17%) and Italy (+12.6%). In France, by contrast, passenger car sales fell 14.7% in June.

The region’s 27 markets posted rather similar results so far this year, with strong year-on-year gains seen in most countries between January and June, including the four major ones: Italy (+51%), Spain (+34%), France (+28.9%) and Germany (+14.9%).

The Bank of Japan has kept monetary policy unchanged but downgraded its growth forecast to 3.8% for the current fiscal year to March 2022, from 4% estimated in April. It stuck to its view that the world’s third-biggest economy is headed for a moderate recovery, and raised its growth forecast for next year to 2.7% from 2.4%.

The BOJ also revised its consumer inflation forecast higher, to 0.6% from 0.1% this year, on the back of rises in energy costs and commodities prices.

Today, nickel prices climbed to a near-five-month high, tracking gains in stainless steel. Nickel is used in electric vehicle batteries, and to make stainless steel. Three-month nickel on the London Metal Exchange rose as much as 2.3% to $19,205.

The central bank also announced a climate scheme, which will offer long-term loans at zero interest to banks that extend green and sustainability-linked loans and invest in green bonds and sustainability-linked bonds. It also said it would start buying green bonds using its foreign reserves.

The BOJ said in its quarterly report:

Japan’s economy is likely to improve... as the pandemic’s impact gradually subsides due to progress in vaccinations.

But the outlook is highly uncertain as domestic and overseas economies could be swayed by developments regarding the pandemic.

A resurgence in Covid infections forced the Japanese government to impose a new state of emergency in Tokyo, a week before the Olympic Games, dashing any hopes of a strong rebound in economic growth this quarter.

Burberry, the British fashion brand known for its trenchcoats and check scarves, has reported stronger-than-expected sales, with younger shoppers snapping up its jackets, leather handbags and shoes. Comparable sales surged 90% to £479m in the 13 weeks to end June from a year earlier, when shops were closed, and were up 1% compared with 2019 levels.

Within this, full-price sales growth picked up to 26%, as the company abandoned markdowns. Burberry recently opened its first flagship with its new global design concept in Sloane Street in London, with three more flagships to follow over the next year.

Marc Gobbetti, the chief executive who is leaving by the end of the year to return to Italy, said:

We saw strong growth across our strategic categories, in particular leather goods and outerwear, and exited markdowns in digital and mainline stores. We continued to roll out our new store concept that will transform how customers experience our brand and product in a uniquely British luxury setting.

Asian stock markets were mixed after a tough day on the markets in Europe and Wall Street yesterday. Japan’s Nikkei lost nearly 1% while Hong Kong’s Hang Seng rose almost 0.3% and the Australian market was flat. Europe is expected to open slightly higher this morning.

The Agenda

• 9am BST: Italy trade for May
• 9am BST: Spain trade for May
• 10am BST: Eurozone inflation for June (forecast core inflation: 0.9%)
• 1.30pm BST: US Retail sales for June (forecast: -0.4%)
• 3pm BST: US Michigan Consumer sentiment for July (forecast: 86.5)