A big start of month week for global economies. There’s Greece, the usual start of month data flow in Australia and other economies, culminating in the US jobs report for June, not to mention the continuing sell-off in China.
There’s also the start of monthly reports on the health of global manufacturing, starting with China.
The latest cut in Chinese interest rates and relaxation of the reserve asset ratio for banks (to boost lending) tells us the government is increasingly worried about the health of the economy, and especially the near 20% slide in the stockmarket in the past fortnight.
There’s also the important end of the June quarter for many companies around the world, not to mention the end of the 2014-15 financial year in Australia, and the June half year for December balancing companies.
But it will be Europe (because of Greece) and the US (because of the jobs report) which will dominate markets this week – the US will be short a day’s trading because American markets are closed on Friday for the Independence Day long weekend.
In the US, the main focus will be on June manufacturing as well as the jobs data, which is out a day earlier because of the Independence Day long weekend.
As well there’s the usual end of month update on existing home sales, consumer confidence and house prices – out tonight and tomorrow night, our time.
The manufacturing conditions index is due out on Wednesday night, our time, car sales for June out are out midweek as well, and another solid 225,000 – 232,000 jobs gain is tipped in the June payrolls report, along with a fall in unemployment to 5.4%.
As well the focus in the jobs and employment data will also be on average hourly earnings data and whether that shows another uptick in wages growth last month.
The usual oil industry data will be released midweek as well and could come on the back of news from the talks with Iran that could see global oil supplies boosted.
US corporate results are light on this week – General Mills is out with its 4th quarter report and watch for news of slowing sales in packaged food products. The food and commodities giant Con Agra also reports its 4th quarter figures in the coming week.
And the other international issue to keep an eye on its the talks with Iran in Europe which are reported to be edging towards agreement.
If it comes this time it could be important for global oil and gas prices if it means Iran will be able to start shipping more oil.
In Europe, all eyes will be on Greece in terms of whether a deal is agreed in time for some sort of face saving deal with the IMF on Tuesday, or whether there will be an extension of that deadline for the repayment of 1.6 billion euros to allow for next Sunday’s surprise referendum.
Greece has failed to get an extension from Tuesday’s deadline to after next Sunday’s vote, so anything can and will happen – be prepared to be surprised either way.
This will dominate affairs in Europe this week – economic, political and corporate.
The most important data out this week in the eurozone will be the flash reports on inflation (it is expected to be up) and employment for June (another small fall to 11% is tipped). Both are due out Tuesday night, our time, along with retail sales on Friday night.
As well the monthly surveys of European manufacturing are out on Wednesday night, our time.
In the UK, final figures for third quarter GDP will be issued.
In Japan, industrial production figures are due out for May later today (along with retail sales data) and should show a small rise, while the Bank of Japan’s quarterly Tankan business confidence survey is out Wednesday and is expected to show a further improvement.
China’s manufacturing conditions PMI for June (Wednesday) will likely show a modest gain reflecting support from the monetary easing.
But the big story for China is the tanking stockmarket which is becoming increasingly volatile.
In Australia, we can expect to see further strength in new home sales data and house prices (for June, for the quarter and the financial year) are out on Wednesday and continued modest growth in credit (Tuesday).
The AMP’s chief economist Dr Shane Oliver says there will be a 1% gain in building approvals (on Wednesday), while we can expected a sharp improvement in the May trade deficit (on Thursday) after the partly weather-related blowout seen in April, and a slight rise in May retail sales (out Friday).
On the credit front the private credit data for May tomorrow will be watched for signs that lending to property investors is slowing to below APRA’s 10% target. “Given the lags involved this may not be apparent though for a few months yet,” Dr Oliver wrote at the weekend.
Australian markets will be influenced by China’s rate cuts (at least for today) and by the growing uncertainties surrounding Greece.
