Greece and China will remain in the background this week as interest turns to earnings around the world and the June quarter inflation data in Australia, while the Reserve Bank will be in the news.
While the Australian June 30 earnings season slowly accelerates this week (with a few production reports thrown in, including BHP Billiton), the big news will be in the US where a number of major tech stocks will report, led by Apple.
First up tomorrow, the Reserve Bank releases minutes of the July 7 board meeting which left rates unchanged and the central bank on watch to see how the economy travels in the next few months.
Banks like the NAB and Westpac last week made it clear they saw no more rate cuts coming from the central bank unlike the RBA’s Kiwi counterpart which is widely tipped to cut rates for a second time this year (the first was at the June meeting) when it meets on Thursday. That will take the Kiwi cash rate to 3%.
Besides the minutes, Reserve Bank Governor Glenn Stevens delivers his annual speech in support of the Anika Foundation in Sydney.
Rather than what he says on rates, markets will be watching for further commentary on house prices, negative gearing and lending to property investors, two areas of continuing interest for the bank.
On Wednesday the Bureau of Statistics releases the quarterly Consumer Price Index for the three months to June.
Bolstered by rising petrol prices, most forecasters see a sharp rise in headline inflation. The Commonwealth Bank sees a quarterly rise of 0.9% for an annual rate of 1.7%. The AMP’s chief economist Dr Shane Oliver sees an 0.8% rise for the quarter and 1.7% for the year to June.
The CBA says underlying inflation “probably lifted 0.7% in the quarter or by 2.4% over the year”. The AMP sees underlying inflation around 0.6% for the quarter and 2.3% for the year.
Wednesday also sees the latest Premiers’ conference with the Prime Minister over two days. It’s more of a ‘retreat’.
Australian June 30 profits continue this week with the annual results later this morning from Australian Foundation Investment Co, the country’s biggest listed investment company.
And there are a number of June 30 production reports, led by BHP Billiton. Others expected to release these reports this week include PetSec, OZ Minerals and Evolution Mining.
Local shareholder meetings this week will be dominated by Macquarie Group and the NZ online accounting group, Xero.
Offshore, Greece still dominates. Greek banks will reopen tonight, our time, after being closed since June 29.
Most capital controls concerning withdrawals and money transfers will remain in place, and while the daily limit was held at 60 euros, a cumulative limit of 420 euros a week was set.
The ECB last week agreed to lift its emergency aid to Greek banks by 900 million euros. Greek trade data, which is out later in the week, should make for interesting reading.
The fears about the Chinese stockmarkets eased. But the economy is back in focus later in the week with the release of the mid-month report on the health of the country’s huge manufacturing sector.
That will be part of the release of global business conditions surveys for July on Friday night our time.
The AMP’s Dr Oliver says, “The readings for June indicated that global growth remains uneven and slightly below trend, albeit this is not necessarily a bad thing as it means that inflation and interest rate pressures remain very low.
“The Chinese manufacturing PMI will be watched for a further slight gain after that seen in June and the US manufacturing PMI is likely to remain around 53.6, but the main focus will be on the Eurozone PMIs to see if they held at the previous month’s reasonable levels despite all the turmoil around Greece."
In the US, the data releases are of second tier figures – home prices and existing home sales (on Wednesday night) but a slight pull back in new home sales (on Friday night).
But the June quarter profit reporting season ramps up with more than 100 S&P 500 companies releasing their updates.
These include Morgan Stanley, Amazon, Microsoft, Texas Instruments, Yahoo, Apple, Boeing, Coca-Cola, Amex, General Motors, IBM, Starbucks and Visa, Caterpillar, Newmont and 3M Co.
In Europe, a quiet week with the release of the surveys of manufacturing and services from Markit late in the week, GDP figures for June in Russia (which should confirm a recession) and the latest minutes from the Bank of England monetary policy meeting at the start of the month.
