The week ahead brings a mix of economic indicators, both locally and overseas, with the rolling impact of the floods, China’s latest economic data for December and for 2010, US earnings and here in Australia, production reports from global mining giants, BHP Billiton and Rio Tinto dominating the news flow.
China will probably be the big news, especially towards the end of the week (see the story above).
As well, Chinese President Hu Jintao will visit the US from Tuesday to Friday.
US President Barack Obama is expected to discuss Chinese currency controls with Mr Hu, which some American analysts and politicians accuse of keeping the Yuan at an unfairly cheap level.
This visit and Thursday’s release of data, will keep China on the front pages of business papers and in the minds of investors.
But before then the production reports from the two big global miners on Tuesday (Rio) and Thursday (BHP) will tell us a lot about the impact of the floods on Queensland, our trade picture, the companies and their outlooks for 2011.
Watch also for other companies providing more updates on the damage bill.
America’s 4th quarter earnings reporting season hits top gear this week, and allied with the surge in positive sentiment and reasonably good news about the economy in the past few weeks, there could be a big impact on sharemarkets after Wall Street reached 30 month highs on Friday.
Big banks and big tech companies dominate the reporters this week, along with General Electric.
On the domestic front, new car sales figures and lending finance data is due, as well as the Melbourne Institute/Westpac Banking Corporation consumer sentiment index.
The National Australia Bank’s latest business survey should also be released this week, probably tomorrow.
In the US retail sales figures for December and industrial production both rose in December, boosting confidence on Friday, sending shares higher and suggesting that the US economic recovery is picking up as the new year begins.
Sales rose 0.6% for the month, and 6.8% for the 12 months to December which was the biggest annual increase in more than a decade.
Figures from the US Federal Reserve showed that output at factories, mines and utilities increased 0.8% in November, the best in five months.
Now this week will see if the weak housing sector is on the improve with housing starts for December to be released in the coming week.
Existing home sales figures for last month are expected to be released.
US markets are closed tonight for a public holiday, so the earnings reports will be squeezed into four days.
Goldman Sachs, Well Fargo, Morgan Stanley and Citigroup are among companies set to report results.
US bank shares are doing well (causing some investors to worry if they might be sold off at the first hint of bad news).
Banks helped push the US market higher last week for a seventh straight weekly gain.
Strong results from JPMorgan Chase on Friday bolstered hopes that the big US banks will do better than expected.
JPMorgan Chase on Friday reported profit and revenue that were stronger than analysts had expected, and CEO Jamie Dimon said the bank could start to increase its dividend once regulators give the go-ahead, probably by the end of this quarter in March.
According to Thomson Reuters, S&P 500 company earnings are expected to have increased by 32% from a year ago.
Besides the banks, economic bellwether General Electric reports on Friday, with tech giants, Apple, Google and eBay out earlier in the week.
Apple will be keenly watched to see if its earnings growth justifies its valuation as America’s second biggest company. Delta Airlines is also due to report.
IBM reports its 4th quarter figures on Tuesday night, our time, and that will also be a big indicator as to how business is spending on technology products and services.
In Australia the flow of official data will be noticeable by its absence; some unofficial surveys will be issued, such as the data gauge from TD securities.
Car sales figures from the ABS will be out today, but the final quarter and 2010 full year production figures from Rio Tinto, and the December quarter and half year figures from BHP will be the big local news.
Investors will be looking to both, especially BHP, to quantify the impact of the Queensland floods on their coal production figures and for any hint of the financial impact in terms of lost sales and damage to mines and other assets.
The floods have seen most of the Queensland coal industry declare force majeure on coking and thermal coal contracts in the last few weeks.
Companies like Macarthur Coal have already issued earnings downgrades as a result and investors are looking for more from the likes of Rio and BHP
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In Melbourne, there’s a market outlook conference tomorrow held by Australian Unity Investments and its partners Platypus Asset Management and Wingate Asset Management.
Meetings due this week include: Finders Resources Ltd, Metals Finance, The Maryborough Sugar Factory, Automotive Technology Group, Australian Pharmaceutical Industries, Uramet Minerals, White Canyon Uranium, China West International AGM, Doray Mineral, PMI Gold Corp, Equatorial Resources’ Iron Mountain Mining, Redbank Copper and Shaw River Resources.
Macquarie Airports releases its December traffic numbers and Sydney Airport Corporation releases full year results.
Melbourne listed investor,
