A busy, busy week. There’s the UK election campaign, Australian inflation, US jobs, US interest rates, Japanese inflation and unemployment, Australian credit and more earnings releases in the US and Asia, plus Greece’s continuing woes.
And two major Australian profits from the ANZ Bank and Macquarie Group are expected in Australia as the March 31 reporting season kicks in.
Tomorrow, March quarter inflation data will be released and will help us assess rate expectations for next week’s Reserve Bank meeting as it will be the last piece of major economic news ahead of the meeting.
The AMP’s chief economist, Dr Shane Oliver, says "We anticipate that increases in prices for education, health and food will have pushed headline inflation up by 0.7% which will take the annual rate of inflation up to 2.7%.
"Underlying inflation is also likely to have increased by 0.7% which will take its annual rate down to 3% in the March quarter from 3.4% in the December quarter.
Australian data for producer prices (today), new home sales and private sector credit (Friday) will also be released.
RBA Assistant Governor, Guy Debelle, is due to speak briefly at a Sydney finance breakfast midweek.
Governor, Glenn Stevens, sent a big message in a speech on Friday that the Reserve Bank is close to finishing its rate rises for the time being.
He said "The Reserve Bank has moved early to raise the cash rate to levels that deliver interest rates for borrowers and depositors more like those that have been the average experience over the past 10 to 12 years. Those interest rates are now pretty close to that average."
The profits from the ANZ (interim) and Macquarie (final) will be closely examined for any signs the slowing in demand for housing and other credit in the past six months has had an impact.
Macquarie though should produce higher trading profits, given the rebound in shares, commodities and the easing of risk concerns.
Later today we will find out if the Federal Court has given its final approval to the scheme of arrangement merger between the Seven Network and Westrac which is controlled by Seven’s major shareholder, Kerry Stokes.
The decision was put off Friday until today by the court.
In the US, the Federal Reserve’s interest rate setting meeting tonight and tomorrow, US time, will again be watched closely to see whether it softens its assessment that economic conditions will justify keeping rates at their current record lows for an “extended period’.
While recent labour market news, retail sales, production and stocks figures have been more favourable, comments from Fed officials suggest that a rate rise is still months away.
What the market is looking for is a change in language used in post meeting statements, even a comma here or a semi colon there to provide something to fixate about.
Dr Oliver says the Fed may soon start to change the language it uses to communicate its views in order to provide it will more flexibility in terms of when it starts to move interest rates back up to more normal levels.
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Meanwhile, US data for house prices should reveal modest gains in February, especially after the solid rebound in March new home purchases.
Home sales and starts will kick higher this month ahead of the expiration of a home buyers tax credit.
We won’t know the true strength of the housing sector until June-July onwards.
The most important number, the monthly employment data, is out next week.
Then we also get the first estimate of March quarter economic growth for the US, Friday night, our time.
The average of market forecasts is around an annual growth rate of 3.4%, down from the 5.6% in the December quarter.
April US consumer confidence is likely to have remained soft when the Conference Board survey results are released.
Seven current or former Goldman Sachs executives are due to testify before the Permanent Senate Committee on investigations in Washington tonight.
It will be the first time the bank’s executives (CEO, Lloyd Blankfein will appear) will be in public in a non-controlled environment, to answer questions about various issues, especially the SEC civil fraud charges launched 10 days ago.
And the first quarter US profit reporting season will continue with another 152 S&P 500 stocks due to report in the week ahead.
Caterpillar reported better than expected earnings overnight and 3M Co releases later in the week.
Ford reports tonight, our time, and should surprise on the upside.
Thomson Reuters has boosted its expectations for first quarter earnings growth from around 36% three weeks ago to more than 48% after last week’s surge of good figures.
Thomson Reuters says that of the 172 S&P 500 companies that have already reported earnings for the quarter, some 83 % have beaten analyst expectations, well above the 61% in a typical quarter and above the 79% in the third quarter of last year.
Besides Caterpillar and 3M, other earnings highlights next week will include U.S. Steel, Texas Instruments, DuPont, payments network Visa Inc and energy giants, Exxon Mobil Corp and Chevron.
The Bank of Japan and the Reserve Bank of NZ are also likely to leave interest rates on hold in the week ahead, while outside the US earnings from Honda, Nissan and Samsung will highlight a busy week of corporate results in Asia, led by Japan and South Korea.
On the economic front Japan will release consumer and producer price indexes and Korea will put out its first quarter GDP number.
