Australian jobs, China’s monthly economic data and the fallout from last Friday’s big US jobs report for October and the almost certain rate rise next month, will dominate investor thinking here and offshore in coming days.
Chinese economic data for October started yesterday with the trade figures.
This week sees releases on Tuesday and Wednesday of inflation, industrial production, retail sales and urban and property investment data.
Retail sales will be the one to watch – with expectations of a continuation of the solid growth seen in September. A slight pick-up in industrial production growth is also expected, while urban investment will remain lacklustre.
Bank lending is forecast to slow after a couple of months of solid growth and consumer price inflation is tipped to fall to an annual rate of 1.5%. Producer price growth though, will remain in deep deflation.
China’s stockmarket is now rising strongly because of changing sentiment which is becoming more confident after the Chinese Communist Party’s big policy and planning conference two weeks ago.
The Shanghai market is back in a “bull market” phase, up more than 20% since the most recent low in August, so even if some of the figures fall short of forecasts, the market view for the country and the economy has become more positive in the past month.
Last week the Shanghai and Shenzhen indices rose 6.1%, but that hasn’t transpired into the steel market, or demand for property and iron ore, which has faded in the past few weeks, dragging prices to around $US48 a tonne.
The improving sentiment in China though will help the Australian markets this week.
In Australia, watch for housing finance data (tomorrow), the NAB business surveys (also on Tuesday) and the Westpac consumer confidence survey (on Wednesday). All will be watched for more signs of improvement, especially the NAB surveys of business confidence and conditions.
The monthly ANZ jobs report is out later today ahead of the October labour force data on Thursday and the AMP’s Dr Shane Oliver says we can expect a 10,000 bounce in jobs after that soft September report, but with unemployment remaining steady on 6.2%. Comsec and CBA economists say the rise could be as high as 20,000 new jobs.
The annual meeting season continues and, while chemicals and explosives group, Incitec Pivot reports full year earnings on Tuesday.
In the US, economists say we can expect an improvement in October’s retail sales growth and benign producer price inflation (both out Friday night). Figures will also be released for small business confidence, job openings and consumer confidence.
The US third quarter reporting season is slowing, with a sharp fall in the number of major companies due to report this week. And according to Thomson Reuters I/B/E/S, US companies on the whole have posted stronger-than-expected quarterly results in general so far this earnings season.
So far around 379 of the S&P 500 companies have reported results, 70% beat profit estimates, compared with 63% in a typical quarter.
At the start of the earnings or profit-reporting season, analysts had tipped a 4.9% annual fall in earnings from S&P 500 companies. So far, Reuters report that earnings have fallen by only 1.5%, and without the impact of energy companies, there would be a small rise.
But FactSet points out that companies with strong offshore operations are being hurt by the rise in the value of the US dollar, with revenues and profits hit. But companies with high levels of US domestic generated revenues are doing a bit better than expected.
This week the first of the major retailers report, starting with Macys, Nordstrom, Dillards and JC Penny. Others reporting include Viacom and tech giant, Cisco. Siemens are expected to report in Europe among a slew of other companies from the region, as well as Asia and Japan.
Meanwhile with the stronger than expected October jobs report putting a rate rise from the Fed next month firmly in everyone’s thinking, there will be a lot of attention on a long list of speakers in the US this week associated with the central bank.
Chicago Fed President Charles Evans, New York Fed President William Dudley and Richmond Fed President Jeffrey Lacker, all voting members of the Fed’s key policymaking group, the Open Market Committee, will speak this week. Other Fed members, James Bullard, Loretta Mester and Eric Rosengren are also scheduled to speak.
And in London a big day on Wednesday for central bank watchers, especially the European Central Bank whose president Mario Draghi and Bank of England governor Mark Carney are due to speak on Wednesday at the BoE’s all-day Open Forum conference on the reform of financial markets.
With the ECB telling markets that the ECB’s December 3 meeting could very well see more easing moves, Draghi’s comments this week will be paid close attention.
The most important figures from the eurozone this week will be the first estimate of third quarter GDP – a rise of 0.4% from the June quarter is forecast, for an annual rate of 1.7%.
