It will be another week when earnings reports in the US dominate markets around the world, helped by rising prices for some commodities, such as oil.
As well, statistics in the US on a range of subjects will add to the sense last week that the US recovery is still happening and that inflationary fears are misplaced.
There are a couple of things in Australia which will drive the Aussie dollar higher than its 91.65 US cent close on Saturday, our time.
Both will be from the Reserve Bank, starting with a speech today by the bank’s assistant governor in charge of economics, Dr Phil Lowe.
He will be speaking in Sydney at lunchtime on the topic of the implications for Australia of growth in Asia.
We already have a good idea of what that topic will entail: we have seen it in the way the prices of iron ore, coal, copper, oil and other commodities have recovered in recent months, along with the share prices of a wide range of local resource and related companies.
Other factors are involved, but the story of rebounding China dragging Australia higher has gained more and more strength in the past few months as it has become clear Australia has escaped the worst of the global crunch and recession.
Dr Lowe’s speech will also help alert us to the most important set of numbers around the world this week: China’s quarterly growth figures on Thursday, along with monthly numbers (and quarterly) on inflation, industrial production, investment and retail sales.
Data for GDP, industrial production, investment and retail sales are likely to show that the Chinese recovery is continuing to gather pace.
September quarter GDP growth is likely to have accelerated further to 8.7% to 9% from 7.9% in the June quarter, according to some forecasts.
Solidly positive figures for China will reinforce in the minds of more investors just how well placed Australia is to benefit from this growth.
Besides Dr Lowe’s speech, the minutes from the RBA’s last Board meeting which lifted rates 0.25%, will be released tomorrow.
They will be examined for more signs of the bank’s thinking on rates and are likely to further reinforce expectations for more rate hikes and data for car sales.
The Westpac leading index and export and import prices will be released and car sales figures: the later trio of figures will come from the Bureau of Statistics.
Annual meetings will include Cochlear, Pacific Brands, Fosters, Qantas, Amcor, Tabcorp, Stockland, Skilled Group, Perpetual, Asciano, Hills Group, Kagara and Platinum Group and GUD. Key themes are likely to be a recovery in demand but rising pressure from the strong Australian dollar (as CSL, JB Hi-Fi, Harvey Norman and Iluka confirmed last week).
A major report will be the first quarter sales tomorrow from Woolworths. Regional pay TV operator, Austar reports third quarter figures as well.
Ten Network releases its full year figures on Thursday. A small operating profit is expected.
But the most important update this week will be the first quarter production review from BHP Billiton midweek.
Rio Tinto last week surprised with better than expected iron ore production and sales figures and an upgraded 2009 sales target (up by 5% to 7.5%).
Thursday of last week saw BHP and Rio reveal plans to revamp their iron ore joint venture to a production-based business.
They dropped plans for the JV to have its own marketing arm independent of the owners.
BHP’s views on iron ore, coal and especially China’s outlook and demand will be watched for by investors eager for confirmation that the upturn is solidly based.
Industry reports say BHP and Rio are asking Chinese steel mills for price rises for 2010, a demand that will be rejected.
In the US it will be a flood of quarterly reports, as well as housing figures that will influence markets.
Companies like Apple, Coca Cola, Caterpillar, Amex, eBay, Yahoo and Amazon, plus McDonalds, 3M and Microsoft due to report.
Boeing, DuPont, Pfizer Inc, Merck and Eli Lilly and Microsoft report as well, as do Lockheed Martin and Northrop Grumman.
Texas Instruments, United Parcel, Kimberly-Clark, Altria Group and Hasbro Inc report along with Wells Fargo & Co and US Bancorp.
According to Thomson Reuters, 61 companies in the S&P 500 had reported third-quarter results by Friday and 79% had beaten forecasts.
Overall, S&P 500 third-quarter results are forecast to show a drop of 22.6% from a year ago, compared with the previous week’s forecast for a 24% fall.
US data for housing starts, house prices, home sales and home builder conditions are likely to confirm that the US housing sector is continuing to recover.
Data for producer prices along with the Fed’s Beige Book of anecdotal evidence on the economy will also be released.
On Thursday, Microsoft will launch its Windows 7 operating system, which could lead to a jump in computer purchases in the run up to Christmas in the US and around the world.
The Conference Board’s September index of leading indicators is out Thursday and Fed Chairman Ben Bernanke speaks tonight.
He’s speaking on the global financial crisis and Asia; on Friday, Fed Vice Chairman Donald Kohn will participate on a panel about the financial crisis and the response to it at a conference in Boston.
In Europe, earnings from Credit Suisse, Ericsson – the Telco group, Royal Ahold – the big Dutch retailer and mega miner – Xstrata which last week abandoned its bid for big rival, Anglo American.
