Today will be rough in Australia and the rest of the week is likely to be just as uncomfortable for markets around the world on the back of figures from the US, Japanese and Chinese economies on growth, inflation and other key indicators, and more rumours of problems with the creditworthiness of major companies and financial groups.
Here in Australia the big test will come Thursday with the February employment figures: it’s a lagging indicator so shouldn’t be taken as an assessment of what’s really happening. Employers are slow to shed employees (they’ve only started in January and February in the US, six months after the slump in housing and the credit crunch appeared).
Japan will see updated figures on fourth quarter growth this week which are likely to see the strong 3.2% annual rate in December quarter sharply downgraded. China will produce inflation figures for February and other figures that will again be influenced by the impact of the severe storms in the first two months of the year.
The big test in the US will be the Consumer Price Index figures this Friday and analysts will be looking for the impact of the strong run up in oil and petrol prices in the last six weeks, as well as explosive rises in the cost of some other commodities, such as wheat, corn, soybeans and even sugar. US break and cereal prices have been rising as a result.
Friday saw oil jump to a record of more than $US106 a barrel.
But the poor jobs numbers of Friday and the continuing speculation about financial groups, such as savings and loan, Washington Mutual and Thornburg Mortgage Inc which has missed numerous margin calls, has shrinking liquidity and could implode in coming days.
But a big trade of shares late Friday boosted the price of Thornton (and there was another in bond insurer, Ambac). These were deals that boosted the share prices of both companies and indicated some possible well-informed dealing as the news about both during trading was pessimistic.
Another source of concern for investors is oil, which has repeatedly hit record highs. It’s been rising as the US dollar falls. Oil fell later Friday after the greenback bounced from an all time low against the euro after the jobs figures were digested and found to be bad for commodities.
Other commodity prices were mixed: copper rose slightly, but gold eased.
Another worry is the dollar, which is testing record lows against the euro and multi-year lows against the yen.
On Friday, oil fell 32c to settle at $US105.15 a barrel, but only after climbing to $US106.54 — the highest level ever.
The US’s international trade deficit for January is due on Tuesday, followed by weekly jobless claims and February retail sales figures, import and export prices, all due on Thursday.
The Consumer Price Index for February is out Friday and is forecast up 0.3% for the overall figure and up 0.2% for the core CPI, which excluded food and energy prices. After the battering last week from credit concerns and Friday’s jobs figures, it will have to be a really poor CPI to push the Fed from its rate cutting course.
On Friday though there will be another survey that has great interest at the moment: the preliminary figures for March of the Reuters/University of Michigan Surveys of Consumer Sentiment will be issued and are likely to maintain the sharp fall seen in January and February, and in last week’s Conference Board survey.
Besides the labour force figures on Thursday we will also get data for housing finance and consumer confidence.
MONDAY:
Gold conference in Melbourne; ANZ Jobs survey figures.
TUESDAY:
Housing finance figures for January from the ABS; ACCI/Westpac survey of industrial trends for the March quarter; NAB monthly business survey for February; Gold conference continues in Melbourne.
WEDNESDAY:
Lending Finance Figures for January; Westpac/Melbourne Institute Consumer Confidence survey; Queensland Energy Conference.
THURSDAY:
Labour Force February from the ABS, and industrial disputes for December; Repcol AGM in Perth; Westpac/Melbourne Institute of Survey of consumer inflation expectations; Queensland Energy Conference continues; Adtrans AGM in Adelaide.
FRIDAY:
Annual results from The Warehouse Group in NZ; Anti-Money Laundering Forum in Sydney from the Australian Bankers Association, Mosaic Oil results.
