China dominates the week for investors here and offshore.
China’s trade figures for April were weaker than expected – telling us that parts of the economy are still struggling, despite the continued weakness in commodity prices which should be having a bigger impact.
The sell-off in global iron ore prices is a development we will have to keep an eye on here this week (see the markets story).
Chinese economic activity indicators are due next Saturday and will be watched closely to see if the improvement in momentum that emerged in March continued into April.
The slight slowdowns evident in the start of month surveys of Chinese business conditions suggest that the indicators are likely to be mixed, with a slight slowing in industrial production, little change in retail sales growth and a continued pick up in investment growth, driven importantly for Australia by property spending.
Credit and money supply growth is likely to have remained strong, and that will no doubt help lift property investment for another month.
While CPI inflation is likely to remain around 2.3% year on year, producer price deflation is likely to continue to weaken, but will still be negative.
It is interesting that the Chinese government last week started releasing frozen pork meat from its strategic reserves to try and put a lid on the surging price of the meat, China’s most important.
The rise in the cost of pork has been the main driver in the rise in consumer price inflation from around 1.3% late last year to 2.3% last month. A further rise in April wouldn’t surprise, given the way the pork reserves were rushed into the markets last week.
In the US, we can expect to see a rebound in April retail sales after the surprise weakness in March (even a rise of 0.1% would be better that what was reported in March); a slight improvement in consumer sentiment and continued low producer price inflation (all due Friday night, our time).
Figures on small business confidence and job openings will also be released.
America’s March quarter reporting period is winding down this week, with a couple of big media groups (Disney and the Liberty Media/Liberty Global companies of John Malone) reporting.
Also reporting are some big retailers led by Macy’s, Nordstrom, JC Penney, Dillards, Kohl Corp and Ralph Lauren.
Brazil’s senate meets Wednesday night, our time, to vote on whether to accept the impeachment motion against president Dilma Rousseff.
If the vote is in favour of her impeachment, Ms Rousseff is expected to be suspended for up to six months and vice-president Michel Temer would become acting president.
In Australia, a quiet week after all the noise last week with consumer confidence out on Wednesday, along with March’s housing finance data.
A speech by the RBA Assistant Governor Malcolm Edey on Thursday will be watched for clues on interest rates. But he is speaking on the card payments system and is likely to reveal an update to the central bank’s attempts to drive down card payment costs.
There are a number of key March 30 balancing company reports, starting with Orica, which releases its figures this morning. Then there’s Incitec Pivot tomorrow, and CSR on Wednesday.
The CBA releases a third quarter trading update before the market opens this morning.
In the UK, the Bank of England will again leave interest rates unchanged when it meets Thursday night, our time.
The Brexit vote on June 23 will see the central bank do nothing, but worries about inflation and the slowing pace of expansion of the economy will come to the fore in latest the inflation report and the media conference that will follow the decision.
And more detailed first quarter economic growth figures for the eurozone will be issued on Friday night, our time.
In Japan, the latest currency account figures will be released, but attention will be on a series of March 31 annual profit reports from some of the country’s biggest companies. They include Toyota,Nissan, Mitsubishi Corporation and Mitsui (both of which have revealed by losses on resource investments).
Watch for commentary on the impact of the rising value of the yen which is hitting the likes of the above quartet and other exporters. As well the first estimates of the impact of the Kyushu earthquakes in April will emerge in a series of surveys.
On top of this, big banks and financial groups, such as the Japan Post Office (which controls the country’s largest savings pool), as well as Sumitomo Mitsui Financial Group and Mizhuo Financial group will be watched for any impact on their finances of the move to negative interest rates.
Japanese markets have been closed for much of the past two rtading weeks for holidays.
