This week will sound like a bit of a re-run of last week with data releases here, in the US and China, to play a major part in driving sentiment which is not expected to be very positive for Australian markets or investors.
The solid June jobs report in the US has all but confirmed the US Fed will start hauling back on its quantitative easing later this year, which will be negative for interest rates in the US and around the world, and for currencies such as the Aussie dollar, which fell again on Friday night.
That means another tough week for investors on the stockmarket.
That won’t be made any easier by the start of China’s June monthly and quarterly economic data and the uncertainties they now bring for Australian markets and investors.
The June monthly, quarter and half year exports and imports as well as the trade balance will be analysed closely for further evidence of a slowdown in China, and for any sign that a crackdown on over invoicing by Chinese exporters to shift money in and out of China, is having an impact.
They are due out on Wednesday and are tipped by Bloomberg to show a rise.
Because of the crackdown on over-invoicing, a fall wouldn’t surprise (for ‘appearance’s sake’ for the government).
Tomorrow sees China’s producer price index and consumer price indexes for June – the CPI will be moderate, but the producer price will again be negative, pointing to intensifying pressures on many Chinese companies.
Chinese property, car production and sales and bank lending data for June will also start appearing during the week.
In Japan, current account data for May will be released later today.
Australian housing finance and labour force data in Australia are out late in the week with Thursday’s jobs report the most important for the markets.
They will be the major statistics released, along with the ANZ monthly job ads survey later today and NAB’s monthly survey of business confidence tomorrow.
The latter is expected to show more of the same – gloom and low confidence among businesses, but not as low as earlier in the year.
Job ads will be lower again and point towards an expected rise in the unemployment rate to 5.6% in Thursday’s release.
Wednesday sees the Westpac Melbourne Institute monthly survey of consumer sentiment – analysts will be looking any sign that the return to the Prime Ministership by Kevin Rudd has boosted sentiment.
The Reserve Bank of Australia’s assistant governor Guy Debelle will speak in Sydney for the launch of the ‘Funding Australia’s Future Project’ on Wednesday evening, while speeches from Federal Resources Minister Gary Gray (today) and Treasury Secretary Dr Martin Parkinson (Friday) will be watched for any change in government thinking on the economy.
In the US just as closely watched will be the minutes of the US Federal Reserve’s June meeting which will be examined because of the important decisions taken at that meeting to firm up the outlook for a slowing in the pace of spending in the Fed’s current round of quantitative easing.
At the same time Fed chairman Bernanke speaks the same day in the US (Wednesday), so it is likely markets could be roiled by the combination).
The start of America’s second quarter earnings releases will have a big impact in the US with Alcoa starring early tomorrow morning, our time.
Alcoa made further cuts in operating capacity last month to try and bring its capacity in line with production.
Major US banks JPMorgan Chase & Co and Wells Fargo are also set to report results later in the week which will tell us how much the housing boom is working to boost bank profits.
According to Thomson Reuters, US second quarter earnings will be weak – just 1.6% is the latest estimate – down from just over 3% last month.
Negative updates are running strongly ahead of positive forecasts at a rate of three to one. Revenue is expected to be up 2.9% for the quarter,according to Thomson Reuters.
Other data due out in the US include consumer credit for May, wholesale inventories are also due out while producer price index figures are will be released on Friday.
