Interest rates and earnings will dominate in Australia this week; in the US its car sales, earnings and the January jobs figures.
Around the world and especially in Asia, it will be nervy markets that hold interest after the worst month of trading for a year or more in some cases.
Here the Reserve Bank board meets tomorrow, with the usual announcement at 2.30 pm.
A rate rise of 0.25% to 4% for the cash rate is forecast.
Watch the banks fall into line with similar increases in mortgages. The moves in December to boost rates by more than the RBA move shouldn’t happen again.
And on Friday, the RBA’s first of four Statements on Monetary Policy for this year will be released on Friday, with updated forecasts for economic growth and for inflation.
They will be up around 3% for growth and around 2.5% for inflation.
That will leave the market with the expectation that further rates rises will happen this year.
We will also get the January survey for the performance of the manufacturing sector today, plus car sales from the industry later in the week.
Statistics include the home price index for the December quarter and 2009, retail sales, building approvals and international trade, all for December and 2009.
Business confidence and conditions for last month will be examined by the latest National Australia Bank survey.
The third intergenerational report from Federal Treasury is out today.
Expect more talk about having to work harder and smarter because of the aging population, but the problem won’t be as dire as outlined in the first and second reports from the Howard Government.
Results step up locally and in the US.
News Corp will be one of the major reports, with second quarter and first half earnings to be released Wednesday morning, our time.
As well West Australian Newspapers, which is effectively controlled by Kerry Stokes and the Seven Network, reports second quarter and interim earnings this week.
Others to report include Tabcorp and Resmed.
The AMP’s chief economist, Dr Shane Oliver says this reporting season is likely to represent a transition from the 20% profit slump of 2008-09 to a profit rebound over the year ahead.
"As such just as many companies are likely to report falls as gains in profits.
"While net profit is likely to be up around 10%, the large amount of equity issuance during the second half of last year will likely result in a much weaker outcome for earnings per share growth.
"The strongest sectors are likely to be the banks, resources and industrials.
"Companies with a heavy US or European exposure remain at risk of disappointment given the weaker economic conditions there and the strong $A.
"Key to watch will be sales and margins and, most importantly, management outlook comments.
"Overall we expect the upcoming profit reporting season to add to confidence that we are on track for decent profit growth over the year ahead."
Besides the RBA meeting, the coming week sees a number of policymaking meetings, including at the European Central Bank, Bank of England, and Norges (Norway) Bank.
Both Australia and Norway have already begun raising rates and the former could so do again, to 4%.
The ECB is expected to keep rates unchanged, but Reuters says we should watch for any signs of support for hawkish Governing Council member Axel Weber’s view that the bank could remove more of its crisis support in coming months and not set interest rates to suit the euro zone’s troubled members (Greece, Spain, Italy. Portugal, Ireland).
Greece, Portugal, Spain and Ireland will all remain in the spotlight with increasing talk about a European Union bailout for the former.
In China a measure of manufacturing conditions will be watched closely for any impact from recent tightening.
In the US it will be a big week on the data front with the ISM manufacturing index likely to have improved further in January and non-farm payrolls likely to show a small rise in employment.
But it will be the markets that dominate attention after the big fall last month, last week and especially late last week.
With heavyweights like Exxon Mobil Corp, Time Warner (and New Corp, of course) and United Parcel Service Inc due to report this week.
The two giant credit-card networks, Visa and MasterCard, will report quarterly results Wednesday and Thursday, respectively as will a group of major US health insurers and other smaller healthcare groups.
Friday’s jobs number will be presaged by the reports on private-sector jobs and then unemployment benefits.
Reuters says that around 500 US companies have reported quarterly earnings so far and of those, 73% have beaten earnings estimates, exceeding the 68% that beat forecasts in the last two quarters.
Given the surprising 5.7% annual rise in 4th quarter growth in the US, the Institute for Supply Management survey on American manufacturing for January will be more closely watched than usual.
There’s a feeling the GDP figures were too good and will be revised downwards in the next two revisions.
That will be followed by the ISM’s service sector survey on Wednesday, expected to edge into growth mode after the largest segment of the US economy struggled to find its footing in the fourth quarter of last year.
The unemployment rate in January is expected to remain flat at 10%, while January’s car sales should benefit from a big jump in fleet sales.
The car sales report comes out tomorrow night, US time, and the jobs figures on Friday.
Economists will be looking to see if jobs continue being lost, or are added, as there were in November, under the revisions last month. The size of any further revisions will also be watched closely.
