Written Commentary
ADM Reports Second Quarter 2026 Results
August 4, 2026
Middle East and Black Sea conflicts continue to cast a long shadow, as bust run of Asian data digested with Canada inflation ahead, ECB’s Lane the sole central bank speaker.
- China: major weather disruptions account for Industrial Production, but Retail Sales, FAI and Property Investment underscore domestic demand weakness; below-target govt spending also not helping.
- Japan: higher than expected inflation, govt subsidy measures, weak SME investment due to Middle East uncertainty and patent transfer account for much of forecast miss, unlikely to deter BoJ from Sept/Oct rate hike.
- Canada CPI: headline to be boosted by petrol prices, core measures seen steady below BoC target.
EVENTS PREVIEW
Developments in the Middle East and Ukraine/Russia will continue to cast a long shadow, though there is also a very busy run of overnight data to digest out of Asia, ranging from Japan’s Q2 GDP and China’s monthly activity and property indicators through Singapore’s Exports to Thai GDP and Malaysian CPI, alongside the UK CIPD labour market survey and Rightmove House Prices. Ahead lie the US NY Fed Empire Manufacturing survey and Canadian CPI, and ECB’s Lane is the sole scheduled central bank speaker.
** China – July Industrial Production, Retail Sales, FAI **
The across the board weaker than expected data had been well flagged by the drops in both the NBS and RatingDog PMIs, but still makes for worrying reading. Industrial Production at 4.5% y/y was the one miss that has to be considered in the light of specific events, with the three typhoons that hit China displacing many workers in key manufacturing regions, and coal mine closures following the Shanxi gas explosion remaining a drag.
By contrast, the marginal 0.5% y/y increase in Retail Sales reflects very weak consumer demand, as evidenced by low take up of ‘cash for trash’ trade in subsidies, as well as low wage growth, as well as those major weather disruptions. Fixed Asset Investment at -6.7% y/y y.t.d., and even weaker on a single month basis at -13.0% y/y, with weakness both in Public FAI -3.3% y/y and Private -9.4% y/y, the former exacerbated by below target public spending. Given the continued and long-standing drag from Property Investment (-19.2% y/y), there will need to be a marked pick-up during the rest of H2 if the govt target of 4.5%-5.0% GDP growth is not going to be missed.
** Japan – Q2 GDP **
GDP was weaker than expected thanks to domestic demand indicators and higher than expected inflation, with Nominal GDP expanding 1.2% q/q as expected, but real GDP only 0.3% q/q vs. a forecast of 0.5%, boosted by a stronger than expected 0.5 ppt contribution from Net Exports (mostly due to lower energy imports) and a 0.3 ppt contribution from Inventories vs. a flat q/q forecast. Weaker than expected Private Consumption was in part due to an increase in tobacco taxes and the introduction of fee-free education (shifting spending from the private to the public sector), while the unexpected drop in Private CapEx was partly due to SMEs curtailing investment plans due to Middle East related uncertainties, as well as the sale of a pharmaceutical patent to a foreign entity. The overall outturn will give the BoJ a pause for thought, but the all important pressure on the JPY will likely keep the BoJ on track for a September or October rate hike.
** Canada – July CPI **
Headline CPI will likely see a big headline boost from petrol prices pacing an expected 0.4% m/m rise, but only edging up the y/y rate to 2.9%, while more importantly core, weighted median and trimmed mean CPI measures are all seen unchanged at 1.8% or 1.9% y/y. As such, the BoC will remain comfortable with its steady rate path signal, and can take time to see if the stronger than expected labour data genuinely imply improving labour demand.
RECAP: The Week Ahead – Preview:
The new week has US Industrial Production and Import Prices, inflation, labour and Retail Sales readings in the UK, the array of monthly activity indicators in China, Japan Q2 GDP, PMIs and a slew of other surveys in the US and elsewhere, along with July FOMC minutes and earnings from US major retailers (Walmart, Home Depot, Lowe’s, Target and TJX), BHP and Deere & Co.
But the focus remains on the conflicts in the Persian Gulf, Red and Black Seas (none of which appear to be moving towards any form of resolution), and associated inflation and interest rate risks from these, as well as pressure from AI investment-related debt issuance and circular financing liabilities against a backdrop of large fiscal deficits in major economies.
August is already set to see record USD denominated credit issuance, but with continued upward pressure on government yield curves (last week’s UST 30 yr was sold at the highest yield since 2001), and credit spreads widening, there are also signs that appetite for new issuance is becoming more discriminating, with the number of investors pulling bids once final (tighter) terms are announced on the rise. That said, cover for issuance remains high, and credit ETFs continued to see net inflows last week, so this may be just a case of typical holiday season caution but requires monitoring.
In the commodity sector, the annual US Pro Farmer Crop Tour in the Midwest runs from Monday through Thursday, with the IGC monthly Grains Market Report also in view, as weather and climate events continue to make headlines across the northern hemisphere.
– China gets the week under way with activity and property sector data that are set to underline current perceptions that domestic activity remains very weak and indeed deflationary, but counterbalanced by ongoing strength in external demand, even if some of that strength is deceptive, above all due to the surge in semiconductor prices over the past year. July PMIs point to downside risks to an expected modest deceleration in Industrial Production to 5.0% y/y from 5.3%, while the anticipated pick-up in Retail Sales to a still abject 1.5% y/y from 1.0% owes everything to base effects. But the most pressing need for stimulus will be evident in deeper contractions in Fixed Asset Investment (-6.2% y/t/d vs. prior -5.7%) and Property Investment (-18.9% y/t/d vs. prior -18.0%), with new and existing Home Prices likely to remain negative in m/m terms. Despite all of this, monthly PBoC Loan Prime Rate fixings are seen unchanged.
– Also on Monday, Japan reports provisional Q2 GDP that is forecast to be unchanged at a solid 0.5% q/q, but accelerate slightly to 2.0% SAAR, with Nominal GDP accelerating sharply to 1.2% q/q from 0.6%. In the detail a slight 0.1 ppt pick up in Private Consumption to 0.4% q/q, a rebound in Business CapEx to 0.5% q/q from Q1’s -0.7%, and another solid 0.3 ppt contribution from Net Exports. Per se not only evidencing strength in the face of energy price rises but also adding to the case for the BoJ to speed up the pace of rate hikes. Thursday’s Trade data are expected to see Exports and Imports remaining robust at 20.1% and 25.1% y/y, respectively, while Friday’s National CPI should rise to 1.9% y/y on both headline and ex-Food & Energy, echoing Tokyo CPI.
– A busy week for the UK kicks off with labour market indicators on Tuesday, with forecasts implying further signs of stabilisation as has been evident in recent surveys. HMRC Payrolls are expected to eke out a 2K rise, though the focus remains on what has been a largely contractionary trend in Private Sector Payrolls for the past 18 months. Average Weekly Earnings are forecast to ease 0.3 ppt to 4.0% y/y headline, and Private Sector Earnings to edge down a little further to 2.8%, underlining a lack of wage pressures, while the Unemployment Rate should fall 0.1 ppt to 4.8%, the lowest since August 2025. The recent easing in CPI is set to be reversed with the sharp rise in the Household Energy price cap pacing a 0.3% m/m rise that will drive the y/y rate back up to 2.9%, though offset by auto fuel prices.
But outside of this, the broader disinflationary trend is expected to see core CPI ease to 2.5% y/y from 2.6% and Services CPI dip 0.2 ppt to 3.4% y/y, its lowest level since February 2022; PPI Input and Output are also expected to ease modestly in y/y terms. Friday’s Retail Sales are likely to show that the strength seen in May and June was probably more a function of the weather and the World Cup than an underlying pick-up in Consumer Spending, with the ex-Auto Fuel seen dropping -0.5% m/m (following 1.1% and 1.2% m/m). If forecasts are correct, then the BoE MPC majority is likely to maintain a steady hand on rates in the near-term, especially if there is a setback in the UK flash PMIs as the consensus expects.
– A lighter week in the US will find its focus in the July FOMC minutes, where the focus will be on how many others beyond the three dissenters were in favour of rate hike(s) going forward, given what Warsh called a ‘robust’ and ‘active’ discussion, and the fact that the prior meeting’s dot plot had nine looking for at least one hike this year. Clearly, some will see these minutes as rather historical in the wake of the weak labour data, small decline in CPI and unexpected Retail Sales setback, but the minutes at least offer some context in the absence of Warsh offering any forward guidance. Otherwise, Industrial Production is expected to pick up modestly to 0.3% m/m, with Manufacturing Output to 0.2%, while NY & Philly Fed Manufacturing surveys to drop back, but remain robust at 10.5 and 25.0 respectively.
Housing indicators are expected to reflect ongoing weakness in the sector, challenged by affordability issues and higher mortgage rates, with the NAHB survey slipping to 33, Housing Starts reversing 5.9% m/m after a 19.0% surge in June, and Pending Home Sales flat m/m after a steep -5.4% m/m in June. Flash PMIs at the end of the week are anticipated to show continued strength, with Manufacturing unchanged at 53.9 and Services edging down to 53.9 from 54.6, though the focus will be primarily on price and employment sub-indices.
– A quiet week in the Eurozone has PMIs that are essentially seen unchanged vs July, while Germany’s ZEW Expectations are forecast to maintain upward momentum at 30.0 vs. 26.3, and more surprisingly, Current Conditions recover further from their Persian Gulf induced slump, reaching -69.3 from -77.6, though still a little way off March’s -62.9 2026 high. The week ending ECB Q2 Negotiated Wages measure holding well below the 3.0% level that the ECB sees as consistent with it hitting its 2.0% inflation target at 2.55%, and per see limiting the ECB council’s willingness to take a more aggressive stance on rates.
– Last but not least, Monday has Canada, where headlines will likely see a big headline boost from petrol prices pacing a 0.4% m/m rise, but only edging up the y/y rate to 2.9%, while more importantly, core, weighted median and trimmed mean CPI measures are all seen unchanged at 1.8% or 1.9% y/y. As such, the BoC will remain comfortable with its steady rate path signal, and can take time to see if the stronger than expected labour data genuinely imply improving labour demand.
– There are 10 S&P 500 companies reporting this week, with worldwide corporate earnings highlights as compiled by Bloomberg News likely to include: Advanced Micro-Fabrication Equipment Inc. China, AIA Group, Alibaba Group Holding, Analog Devices, Baidu, Bank of Jiangsu, Bank of Ningbo, BHP Group, China Coal Energy, China Hongqiao Group, China Jushi, China Petroleum & Chemical, China Telecom, Citic Securities, CMOC Group, CSC Financial, CSL, Deere, East Money Information, Estee Lauder, Geely Automobile, Goodman Group, Guangdong Dtech Technology, Guotai Haitong Securities, Hithink RoyalFlush Information Network, Home Depot, Hong Kong Exchanges & Clearing, Jiangsu Hengrui Pharmaceuticals, Keysight Technologies, Lens Technology, Lowe’s, Muyuan Foods Group, NetEase, Novonesis Novozymes B, Ping An Insurance Group, Piotech, Pop Mart International Group, Ross Stores, Shandong Hongqiao Aluminum Industry Holding, SJ Semiconductor, Suzhou Dongshan Precision Manufacturing, Suzhou TFC Optical Communication, Target, TJX, Viking Holdings, Walmart, Xiaomi and Zijin Mining.
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