Business this week will be dominated by the March quarter’s Consumer Price Inflation figures on Wednesday, the ANZ’s 2008 interim profit the same day, and of course, the contentious West Australian Newspapers shareholder meeting in Perth, also on the same day.
The CPI, and the Reserve Bank’s versions of it will be of interest: something around an annual rate of 4% or more is the expectation from the markets after the RBA and Governor Glenn Stevens has spent the past month softening us up for a bad figure, but no rate rise the following week after the bank’s May board meeting.
Increases in the cost of petrol, food, health, education and rents will be the main drivers: the RBA’s core inflation measures are expected to be around 3.9% or a bit more as well. Inflation for the quarter is estimated at 0.9% to 1.2%.
The Producer Price Indexes for the March quarter are released later today here and will give a good idea how the price pressures are working their way through the three stages of business: preliminary, intermediate and final. There is some linkage to the CPI from the PPI, but not a lot.
The ANZ’s half year’s profit on Wednesday will be watched closely for any update on the $975 million in bad debts and provisions already revealed at the start of the month.
The bank said revenues were trading up at around an annual rate of 11%, with little in the way of a surge in personal bad loans: all the problems are in the business area.
Analysts say the early release of the bad debt news should have put all the bad news out into the market and into the ANZ share price, which has fallen.
With US banks rebounding after the big losses of last week from Merrill Lynch and Citigroup, but good news from JP Morgan and a host of smaller regional banks (that’s actually not so bad news) financial stocks could be on the up and up.
But bad news from London could be a dampener with the Royal Bank of Scotland rumoured to be ready to reveal a huge $US4 billion plus loss and writedowns, a drop in new business and a possible $20 billion rights issue (deeply discounted) to boost tier one capital, and discounted by the slump in bank share prices over the last year. The rights issues could be the start of a flood of similar capital raisings by other European banks.
US banks and investment banks have raised $US150 billion in fresh capital since the crisis started: UBS has raised over $US30 billion in new capital and savings from cutting dividends and Societe Generale of France has had huge multi-billion dollar rights issue to raise fresh capital after the trading scandal broke earlier in the year with multi-billion dollar losses.
Swiss bank, Credit Suisse reports first quarter results this week and is expected to reveal more information about a trading scandal that plunged the bank from a sound first quarter profit into big losses in a space of 24 hours in March.
UBS holds an important shareholder meeting this week which may see a considerable amount of emotion expended from activists and others looking for answers and heads to roll, in addition to the head of the former CEO and other senior managers who have gone. UBS had a shareholder meeting in late February to vote on last year’s capital moves. The latest losses and capital moves will be debated Wednesday night, our time.
In the US, data for home sales, durable goods orders and final consumer sentiment figures will be released. The March quarter profit reporting season continues with expectations that last week’s better than expected news will be repeated.
Key results in the US this week will be from Bank of America tonight, oilfield services firm Halliburton, mobile phone chip maker Texas Instruments, diversified manufacturer 3M Co, jet maker Boeing and soft drink company Pepsico.
Last week crude oil reached a record of $116 a barrel and US rice futures soared, sparking worries that global turmoil over food prices could lead to panic buying, sending prices higher still. Rice hit a record price of $US1,000 and a bit more in some markets in Asia.
The final report from the April Reuters/University of Michigan Surveys of US Consumers is due on Friday and will show whether higher food and fuel costs and the shrinking job market have made shoppers more pessimistic. Oil and petrol prices in the US hit a series of new records last week. The survey’s preliminary April reading showed confidence dropped to its lowest level in more than a quarter century.
MONDAY:
Australian Bureau of Statistics releases March quarter producer price indexes and new motor vehicle sales for March; the QBE conditional offer for IAG closes at 5 pm today, Sydney time; a Federal Court hearing in Melbourne in relation to Opes Prime: the ANZ and Beconwood Securities are the parties.
TUESDAY:
Austar first quarter results; Wesfarmers half yearly investor briefing – details of its proposed rights issue should be released in time for that, so it could be late Monday or first thing today; Newcrest Mining third quarter production report and the ERA AGM is in Darwin.
WEDNESDAY:
March quarter CPI from the ABS; ANZ Interim profit, West Australian Newspapers EGM in Perth; Santos Ltd first quarter production report.
THURSDAY:
Housing Industry Association’s March quarter report; Caltex Australia AGM; Rio Tinto AGM in Brisbane.
FRIDAY:
ANZAC Day.
