Corporate earnings and the strength of the latest stockmarket bounce will be the big issues for markets this week.
They will overshadow the flow of figures about the economy, led by the minutes from the last RBA meeting and a speech by RBA assistant governor, Malcolm Edey.
While of interest, they won’t have the same impact that the recent run of statements from the central bank and last Friday’s appearance by Governor Glenn Stevens at the House of Representatives economics committee in Sydney.
He again raised concerns about Sydney house prices and the lack of land that is boosting the scarcity of affordable housing in the country’s biggest property market and he also made it clear that official interest rates would eventually rise to around 5%.
July car sales figures will come from the Australian Bureau of Statistics and will show a fall after tax incentives boosted car sales in June.
The Australian profit reporting season will enter its second biggest week with 60 or so major companies due to report including OneSteel, Origin Energy, Qantas, Woodside, Rio Tinto, Newcrest, BlueScope, Ansell and Wesfarmers.
Also to report: Commonwealth Property, Monadelphous, CFS Retail, Snowball, United Group, GWA, Perpetual, Skilled Group, CSL, Boral, Amcor, Clough, ASX, Macquarie Leisure, Downer EDI, Macquarie Office, AGL, Cromwell, Cardno Group, Brambles, Insurance Australia Group, Macquarie Airports and Billabong International.
A big week and so far the reporting seems on track: down, but not miserably so like many companies in the UK and US.
In America, the market will be tested after last week’s figures made it clear the American consumer is not buying, spending or really interested in boosting the economy.
The focus is likely to be on the housing sector with data for housing starts, home sales and a survey of home builders.
They are likely to confirm the housing sector is stabilising, but far from rebounding strongly enough to support the recovery in the market.
Japanese June quarter GDP data is expected to show a modest improvement after sharp falls in prior quarters.
Hong Kong’s second quarter GDP rose 3.3%, Singapore rebounded, as did China. Germany and France had positive growth: small, but it was positive.
Less than 50 Standard & Poor’s 500 companies remain to report quarterly financial results, including the two major home improvement retailers, Lowe’s and Home Depot Inc. Clothing retailer Gap Inc and discount chain store Target are also due to report this week.
After Wal-Mart reported a fall in US same store sales (but higher earnings because of offshore growth in some markets), the news from the US retail sector this week and next will be very closely watched.
Thomson Reuters says estimates for second-quarter S&P 500 earnings are now expected to drop 28% from a year ago compared with 29.5%. The first estimate was for a 36% fall.
Thomson Reuters data showed that of the 456 S&P 500 companies that have reported earnings so far, 72% have topped analyst expectations.
Revenues showed less improvement, and analysts have said companies’ stronger bottom-line results continue to come largely from deep cost-cutting and from the freedom to report underlying earnings the way they want.
As well, last week saw weak consumer sentiment in August and an unexpected decline in July retail sales.
Federal Reserve Chairman Ben Bernanke speaks on Friday in Jackson Hole, Wyoming at the high profile annual Kansas City Fed Bank’s economic symposium.
Markets will be looking for him to elaborate on last week’s post meeting statement in which the Fed said the economy was levelling out, but that interest rates would remain at current record lows for a long period of time.
Because this is a high level economic conference, some discussion and questioning about the timing of the Fed’s exit from its huge stimulus program will be another issue markets will be looking for.
The US National Association of Homebuilders index for August is scheduled for release tonight, while the July housing starts and existing home sales reports for July are scheduled later in the week.
The New York Federal Reserve’s survey of manufacturing activity will be released on Monday and the Labor Department’s Producer Price Index is set for Tuesday night, our time.
In Europe, manufacturing and services indexes along with UK retail sales will be released.
Results will come from groups like cement maker Holcim, engineer Voestalpine, retailer Royal Alhold and Rio Tinto.
The Bank of England will release minutes of its monthly interest rate decision on August 19.
