On the face of it a quiet week, except for the fact that it’s the week after the Fed’s no rate move decision, and yet another test of sentiment about the health of the Chinese economy.
In Australia we got the new Federal cabinet yesterday and that will dominate news flow here this week.
Overseas, the main release will be the mid-month surveys of manufacturing activity (centred on China’s) and the final estimate of second quarter GDP for the US on Friday.
That will continue the debate over the health of the world’s biggest economy (even though that is backward looking and out of date), and whether the Fed was right not to lift its key interest rate.
Markets will be volatile and hard to settle, the instability is likely to continue for a while yet and China will be at the forefront of thinking.
So that adds to the importance of this week’s focus – the so-called ‘flash’ reports of manufacturing activity around the world, dominated by China’s.
They will be issued on Wednesday and will show whether manufacturing conditions, especially in China, have again weakened this month or will the long forecast signs of a stabilising appear to give markets hope?
The August flash report showed a slide to a more than six year low of 47.1, the final report strengthened a touch to 47.3, still the lowest for six years.
Now economists are wondering if the economy has continued to deteriorate or whether signs of stabilisation will start appearing as the government increases targeted spending on new projects to stimulate the economy.
Analysts forecast a small improvement to a reading of 47.6 for China. A reading below 50 however indicates contraction. Readings that persist around the 47-48 range indicate an economy stumbling on the edge of a slowdown.
But before that, Greece returns to haunt markets after yesterday’s national elections – the third time this year the country has gone to the polls. This one was called by the former prime minister Alexis Tsipras in the wake of the country’s bailout.
In the US, there shouldn’t be any surprises from Friday night (our time) third estimate of June quarter GDP.
Economists expect an unchanged 3.7% annual rate in the report, from the second estimate a month ago. That was up sharply from the re-stated 0.6% first quarter growth (previously a small contraction).
Some economists and others though will ask if there’s no change, why did the Fed leave rates on hold?
There’s also a smattering of third quarter profits due from companies like Pier One Imports, Bed Bath and Beyond, Accenture, General Mills, ConAgra, Blackberry and Nike.
Elsewhere in the US, there’s new data on existing home sales (tonight, our time), home price data (tomorrow night, our time), the ‘flash’ September Markit manufacturing conditions report (Wednesday night), durable goods orders and new home sales (both Thursday night), with the GDP report the night after,
In Europe, the ‘flash’ business conditions reports are out Wednesday night, our time, and should show a small slowdown, but at a high level.
Watch Germany’s report in particular where the slowdown might be a bit larger, and the UK where there are more signs the economy is slowing.
Next Sunday sees elections in the Spanish region of Catalonia. Unfortunately for the separatist politicians, polls show Catalonians want to stay in Spain.
But if they poll backs a breakaway party group, then Spain will become a political and economic pressure point, ruining a solid recovery in the economy in the past 18 months.
In Asia there’s the manufacturing report for China on Wednesday and the release of a similar report for Japan.
Japan also sees inflation data released on Friday, and the day before Prime Minister Shinzo Abe is expected to outline his goals for the remainder of his term after he was reappointed as leader of the Liberal Democratic Party earlier this month.
His government late last week won a controversial parliamentary vote to allow Japanese defence forces to serve overseas. But Mr Abe’s popularity ratings have sunk and members of his party are starting to wonder about the impact of that on Upper House elections next year.
In Australia a very quiet week for data. The ABS’s June quarter home price index (tomorrow) will likely show a slowing in house price growth.
The ABS also releases population growth data for the March quarter.
But also keep any eye out for the September resources production and export forecasts from the Federal government’s Office of the Chief Economist as well as the final Federal budget figures for 2014-15. If not released next week, they will be out by the end of the month.
And there are a number of full year results expected from the linked companies – Washington Soul Pattinson, Brickworks, New Hope and TPG Telecom – the latter will be the most interesting for any update on the way the integration of iiNet is going.
