The coming week will again see a concentration on the Australian economy after the conflicting data released last week, along with the Reserve Bank’s decision to leave interest rates unchanged.
Last week’s data suggested the economy is neither hot or cold, but confused and this week’s figures won’t change that view very much at all.
May unemployment, jobs data, housing finance and business and consumer confidence will all be tested by the release of the usual monthly reports.
Offshore, a quieter week also lies ahead, with China moving to centre stage – the mixed May trade report started the flow of data yesterday, then there’s inflation (tomorrow) and on Thursday the release of key measures of urban investment, property growth, industrial output and retail sales.
The AMP’s chief economist Dr Shane Oliver expects all to show a stabilising of the pace of activity in the Chinese economy, especially manufacturing, although price deflation in manufacturing will continue to be a concern.
But watch for the flow of news from the annual development week conference held by Apple in San Francisco which could see some dramatic news about key products – such as the new operating systems for the iPhone and Macs, a completely new approach to music and possible new details for the iPhone 6 revamp in September, new development tools for the Apple Watch (and possibly products) and Apple TV.
The music changes will replace iTunes in many respects and will change Apple’s focus to streaming and the iTunes and App Store. The changes will also be available for Google’s Android operating system, so its a big deal, with new and lower revenue shares for Apple which will likely flow through to every App in the App Store and move away from the 70% – 30% share.
The updates will have a major impact on the Apple share price and the tech sector as a whole, which is the best performing part of the US stockmarkets with the Nasdaq up more than 19% so far this year – more than twice the gains for the S&P 500.
In Australia, there jobs report for May on Thursday will likely see no real change in jobs or the unemployment level which Dr Oliver sees remaining at 6.2%.
After the jobs report, the most important event this week so far as the economy is concerned, will be the speech tomorrow from RBA governor Glenn Stevens to an economists’ lunch in Brisbane.
It’s his first speech since late April and markets will be looking to him for more guidance on the property boom (bubble?) in Sydney and Melbourne, as well as the strength of the economy (don’t hold your breath).
Later this morning the ANZ jobs ads report for May will be released and should show another small rise – as it has for much of the past nine months.
NAB survey (also out later today) will be watched to see whether the budget had a positive impact on business confidence and it will be interesting to see whether consumer confidence (out tomorrow) retains the budget-related boost from last month.
April housing finance data (also out later this morning) could ease a touch after the strong gain seen in March and lending finance data is out on Friday, both from the Bureau of Statistics.
And investors should keep a close eye on company announcements this week – we are in update territory with the June 30 end of tax and financial year approaching for most companies.
We have already seen some downgrades – the latest on Friday afternoon from Nine Entertainment Co which will see the company’s shares come under pressure this morning.
In the US, Dr Oliver says May retail sales (out on Thursday night, our time) should “show a decent 1% bounce after a period of partly weather related soft results, a slight rise in consumer sentiment (Friday) and producer price inflation (also Friday) to show a gasoline driven bounce but remain benign on a core basis”.
Friday’s strong jobs report (280,000 jobs created in May, well above forecasts, and another 32,000 found for the two previous months) means the market is now more accepting of a rate rise timed for the September quarter.
In the wake of that report, strong retail sales figures will add to the belief that a rate rise is about to happen.
And the news from the Apple developers conference this week will likely be the dominant news for US stockmarket investors.
In Europe the main focus will remain on talks on Greece and its finances. Greece and the EU moved to the brink of a break in talks over the weekend as relations worsened between the government and the EU Commission, which had been Greece’s biggest supporter in the debt/bailout talks.
As well, there’s the final first quarter GDP reports for the eurozone (out tonight) and April industrial production figures (on Friday night) which are expected to show a bounce back after March weakness. Trade and retail sales figures are out in the UK tomorrow night, our time.
Tonight global banking giant HSBC outlines a second major revamp in four years – an announcement which could see up to 20,000 people sacked around the world, businesses sold off and even the bank’s head office moved out of the UK and back to Hong Kong.
In Asia, there’s the flow of economic data from China, Industrial production data from Japan on Friday, while on Thursday the Reserve Bank of NZ releases its latest interest rate decision.
Some NZ analysts say there’s a real chance of the central bank cutting rates from 3.5% to 3.25% because of weak inflation and the softening outlook for exports and domestic demand. But the Auckland property boom remains a major obstacle.
