The usual mid-month surveys of the health of global manufacturing will dominate the coming week, while in Australia the state of the property market will come in for more examination midweek from the Reserve Bank.
The spate of polls from last week – Scotland, Sweden, Fiji and NZ on Saturday (won for a third time by the Nationals) triggered a lot of volatility, helped by the other key vote – that of the US Federal Reserve’s Open Markets Committee which again agreed to leave American monetary policy unchanged.
That volatility will continue to impact sentiment this week, especially with a number of leading Fed members out and about in the US speaking.
Looking closer to home the RBA’s half yearly Financial Stability Review (out on Wednesday) will be dominated by the growing concerns in the central bank about the state of the property sector.
The RBA will indicate that while the financial system remains in good shape, it is increasingly concerned that the residential property market may be getting too hot and posing risks for financial stability in the future if it continues to hot up.
We were given a taste of the RBA’s concern in last week’s minutes of the September 2 board meeting where the contents of the Stability report were discussed.
According to the minutes, Wednesday’s report will warn that; “additional speculative demand could amplify the property price cycle and increase the potential for property prices to fall later. The main risks in such a scenario would likely be to the stability of the macroeconomy rather than the financial system, particularly if households were to react to declines in their wealth by cutting back on their spending. Members were also updated on some of the recent actions by the Australian Prudential Regulation Authority in this area.”
That sounds pretty concerned and we can look for more moves from the RBA and APRA to force banks to restrict lending, especially to self-managed super funds which are perhaps the major concern.
On top of this we have an appearance this week from RBA Governor Stevens on Thursday where he will no doubt be questioned as to the bank’s property concerns.
And Assistant Governor Richards speaks Friday US time in Chicago at a payments conference.
The only economic figures of note are the latest job vacancies from the Federal Government which will be released on Thursday.
Corporate reports will be pretty thin on the ground – the main ones expected will be the full year figures from companies in the Brickworks-Washington H.Soul Pattinson group.
They are due to release their 2013-14 reports during the next few days.
Apart from the two main groups, Ruralco, coal miner, New Hope Group and emerging telco, TPG, will also report.
Globally, the main focus in the week ahead will be the release of the various business surveys for September, starting tomorrow in Asia with the Chinese report from HSBC/Markit.
Given the surprise weakening shown in August’s economic data, the flash HSBC manufacturing PMI for China will be watched to see whether the latest slowdown continued into September, and if it has, it will impact local markets first.
The AMP’s chief economist Dr Shane Oliver says the Eurozone surveys are expected to remain off their previous highs and the US one is expected to remain strong.
In the US, other data for release this week include existing homes sales (tonight, our time) and new home sales (on Wednesday, our time), durable goods orders (Thursday night) and the third estimate of US second quarter GDP.
Dr Oliver says we could see another upwards revision to June quarter GDP growth (Friday night) to 4.6% annualised from 4.2%.
A number of senior Fed members will be speaking in the US this week in the wake of last week’s decision by the central bank, so expect a lot of publicity around the comments and for that to feed into currency, bond and equity prices.
There’s the float of 25% of the Citizens Bank on Thursday in the US which will attract a lot of attention because it’s the first one of its kind among US financial groups for sometime. Floats, or Initial Public Offerings (IPOs) are very popular at the moment, especially among tech stocks, as we saw with the record-sized Alibaba IPO on Friday.
US profits this week are a mixed lot – Carnival Corp, the cruise line business, Bed Bath and Beyond, Diamond Foods, Nike, consulting firm Accenture, Blackberry, Micron technology and the huge Swedish clothing retailer H&M.
In Asia, the biggest release (apart from the manufacturing surveys) will be Japanese inflation data on Friday. It’s likely to show not much of a rise, despite the echoes of the April sales tax hike still feeding through into prices.
There’s not much in the way of important economic news in Europe this week.
