The fall out from the US May jobs report, Australian jobs, US retail sales and Chinese economic data for May will be the focus in markets this week.
In China, inflation is tipped to have increased to 3% year on year (from 2.8% in April).
The May figures are due out on Friday.
This will largely reflect the low levels of inflation a year ago and the reported easing in food prices from their highs earlier this year, so May’s figure will look worse than it seems.
However the measure to watch will be producer price inflation which is running at more than 7% a year.
Watch also for iron ore and copper imports and steel and car production; all will tell us how the strength of domestic demand in China is going.
But of greater importance (despite what some market economists might say) will be data for new bank loans, industrial production, urban investment and property prices.
Industrial production has slowed in the past two months and although house prices rose by 12.8% in the year to April, a fall is expected for May as Chinese government attempts to cool demand kick in.
If there’s a cooling evident, markets are likely to react positively in the expectation that the Chinese authorities could soon stating easing their tightening measures.
In Australia, labour market data for May on Thursday will show a modest (around 10,000 is the market estimate) rise in employment and the unemployment rate falling to 5.3% from 5.4% in April.
Later today we get the ANZ job ads figures for May as an opener to the Thursday report on the labour market.
Consumer and business confidence readings from Westpac and the NAB respectively are likely to show modest falls in response to renewed worries about the economic outlook.
April housing finance data is also out and could record a modest bounce.
A speech by RBA Governor, Glenn Stevens, on Wednesday in Sydney is likely to confirm that while the Bank is still looking to tighten rates, but nothing will happen for a while the uncertainty levels are high from offshore.
Both the European Central Bank and Bank of England are expected to leave interest rates on hold, but the ECB will look to start removing some of its fiscal stimulus.
The AMP’s chief economist, Dr Shane Oliver, says, "Unfortunately though the ECB is making a grave mistake – with fiscal tightening set to detract 1 to 1.5 percentage points from euro-zone growth over the next few years and price inflation heading into deflation it should be cutting its key lending rate to near zero (from 1% currently) and engaging in quantitative easing like the Fed and Bank of England".
In the US the focus will be on May retail sales data (out Friday) which anecdotal evidence points to a slight fall after several months of gains.
The Federal Reserve’s releases its so-called Beige Book for information and anecdotes from its 12 reporting districts across the US.
Alcoholic beverages giant, Brown-Forman Corp, reports quarterly earnings on Wednesday and National Semiconductor reports on Thursday.
According to Thomson Reuters, estimated share-weighted earnings for the S&P 500 for the second quarter 2010 stood at $US184.3 billion as of Friday, slightly under the prior week’s $US184.5 billion.
In the S&P 500, there have been 61 negative EPS guidance preannouncements issued by corporations for the second quarter (the current one) compared to 51 positive preannouncements.
The oil spill continues in the Gulf of Mexico and oil giant, BP, remains in the spotlight as a result.
The Thomson Reuters/University of Michigan’s Surveys of Consumers which is due on Friday is forecast to show a preliminary June reading of consumer sentiment at 74.5 – up from the final May sentiment reading of 73.6.
On Thursday, a report on the international trade deficit for April is forecast to show a trade gap of $US41 billion versus March’s deficit of $US40.42 billion, which was a 15-month high.
The US federal budget for May is expected to show a deficit of $US140.0 billion versus $US189.65 billion previously.
