A big week for markets here and offshore, and for investors large and small.
The 2009-10 financial year and the second quarter ends Wednesday and the new financial year starts Thursday.
Judging by the figures so far, the Australian market will probably be up around 11% in the 2010 financial year.
The All Ords closed at 3,948 on June 30, 2009 and ended at 4,439 on Friday, a rise of 491 points.
It was up well over 800 points in the December half year.
The low was in early July 2009, the high of 5,049 was reached on April 15 of this year.
In Australia it means we have to watch the market Wednesday, especially, for some unrealistic closing prices, but in Europe there could be some dislocation to financial markets and investors are now focused on that.
Wednesday sees billions of dollars of junk-rated Greek bonds drop out of various market indices, which will trigger some selling (if it hasn’t occurred already).
Many investors have been selling these Greek bonds since the last big downgrade because they are not allowed to hold sovereign debt with a junk rating.
Premiums on Greek bonds over German bonds jumped sharply late last week and there seems to be concern now about possible default, which is illogical given the 750 billion financial support package now in place.
On July 1 another test with markets bracing themselves for when European banks have to pay back 442 billion euros worth of one-year loans borrowed from the European Central Bank last year, although they will have the option of switching to shorter-term loans (a three month facility is in place).
Spanish banks have been borrowing more than 85 billion euros a day under the facility; Portugal’s banks are on the hook for 35 billion.
Many banks in Germany and France are holdings billions of euros of Greek bonds, or have sold them to the European Central Bank in exchange for the temporary liquidity.
All this is raising market tensions, so it is no wonder that euro-priced interbank lending rates hit their highest levels in over eight months Friday.
US employment data on Friday will be an important test of market sentiment, which has turned increasingly negative.
Private credit figures for May from the Reserve Bank on Wednesday and then the commodity price Index for June on Thursday.
Thursday sees retail trade and building approvals issued for May by the Australian Bureau of Statistics.
Economists expect retail figures to show a modest improvement of 0.3%.
Building approvals are seen up 2% after the surprise 14.8% plunge in April.
That will give us a good look at two of the weaker areas of the economy at the moment, retailing and home building and some parts of the real estate market which seem to be slowing.
Thursday also sees the start of important manufacturing surveys (the various PMIs, or Performance of Manufacturing Indexes) in Australia, China, the UK, Europe and the US.
The China and the US surveys are the most important; China’s will be out on Wednesday, if previous months are any guide.
No results locally this week and the most notable meeting is Gindalbie Metals today.
Australian car sales could be out from the industry on Friday.
There’s also an election in Guinea tonight, last night, or time that could play an important role in whether Rio Tinto keep its share of the huge Simandou iron ore prospect.
Rio had control of the site once, lost part of it to a former government and the outgoing military backed administration has threatened to take the remaining bit from Rio.
The poll result won’t be finalised for a day or two, Rio is confident there will be no change, but the country is a volatile place to do business.
Asia-focused bank, Standard Chartered is due to reveal a trading update, and we could learn more about the final share of the IPO for the Agricultural Bank of China in which Seven Group Holdings is investing $US250 million (more than $A285 million).
Japan sees the Tankan quarterly survey of big business by the Bank of Japan released on Thursday.
In the US the coming week will be dominated by the jobs figures on Friday and the new financial regulation bill which goes to a final vote and a hoped for signing by president Obama a week tonight.
Figures on personal income and spending for May are out, along with the Case Schiller home price index for April.
The last consumer confidence measure is out (the Conference Board).
Germany will release its retail sales figures for May tonight.
Tuesday sees the EU release its measures of economic, industrial and services confidence for June.
On Wednesday Germany will release its unemployment rate figures for June.
And on Thursday the European Union will release its purchasing manager index of manufacturing for June.
US car sales for last month are due for release later in the week.
Finally, on Friday in the US, non-farm payrolls for June.
Reuters expect employers cut 100,000 jobs in June, reflecting the end of temporary census hiring, but market forecasts say that private hiring will be up by more than 100,000.
It was the weak level of private payroll growth in May (41,000) that shocked investors and added to the growing fears of a double dip recession in America.
Watch also for worries about the future of BP; its shares are now down 52% since the spill happened and the loss of market value is over $US100 billion.
BP’s problems, the impact of the Gulf spill and the fallout could be very important to investor confidence about the sector and the Obama Administration.
