Oil will dominate the coming week, along with President Donald Trump’s first foreign trip.
Will he put his foot in it on this trip? So far in Saudi Arabia it has been a succession of deals and billion dollar announcements – all arranged well ahead of the trip and nothing more than wallpaper.
Trump started his first overseas visit since becoming US president by travelling to Saudi Arabia at the invitation of Saudi King Salman.
The nine-day tour will also see Mr Trump visit Israel and continue on to Rome before heading to a Nato summit in Brussels.
The reception in Europe, especially from German Chancellor Angela Merkyl will be very different to the fawning going on in Saudi Arabia who will have a much more important role at Thursday night’s OPEC meeting in Vienna.
Mr Trump will also attend a G-7 meeting in Sicily. His trip comes with Mr Trump under siege at home following revelations that he pressed James Comey, the FBI director who was abruptly dismissed last week, to drop a probe into the Trump administration’s ties with Russia. He also called Mr Comey a ’nutjob’ in talks with Russian politicians at the White House.
As well, US papers are reporting that a senior member of Trump’s White House team is a ‘person of interest’ for the fBI probe of the Trump links to Russia.
Mr Comey has been invited to testify before Congress on Wednesday night, Sydney time, an appearance that will draw attention away from Trump’s trip (which will get right up his nose).
The midweek minutes from the US Federal Reserve’s last monetary policy meeting earlier this month will be examined for more detail about the path of US interest rates.
A June rate rise is firmly on the cards and on Wednesday, investors get the opportunity to look at the minutes of the Fed’s May 2-3 meeting for further clues on the timing of the next rate move
Reaction will be be muted because the markets view them as old news, expecting a June rate rise regardless on what is in the minutes.
Opec members and their allies such as Russia meet in Vienna on Thursday to discuss whether to extend an agreement to curb oil output.
According to traders it is a done deal, the only question is whether the production cap will be extended for six or nine months.
Thanks to Saudi Arabia, Opec and Russia, which is not an Opec member, agreed last November to curb supply by 1.8 million barrels a day for six months.
Both have backed extending the agreement to cut output until March 2018.
That agreement means the meeting will be free of any dramas or dummy spits.
Apart from these two major events in the US, we can expect some second tier figures and the second update of first quarter GDP on Friday night, our time.
The Markit manufacturing conditions survey for May is out Wednesday night our time, after new home sales on Tuesday night and existing home sales on Wednesday night, our time.
April durable goods orders (Friday night and a top tier figure) are expected to remain consistent with continued reasonable growth in business investment, according to the AMP’s Chief Economist, Dr Shane Oliver.
US March quarter GDP growth (Friday) is likely to be revised up to an annualised rate of 0.9% in the second reading from the initially reported 0.7% a month ago.
In Europe, expect May business conditions manufacturing surveys to show stronger economic growth
In Asia, Japan’s core inflation for April (Friday) is expected to remain around zero consistent with the Bank of Japan maintaining a zero 10 year bond yield and quantitative easing for a long time, according to Dr Oliver’s forecasts.
In Australia, March quarter construction data is expected to show continued softness in mining related engineering construction but gains in residential and non-residential construction.
Speeches by RBA officials, deputy governor, Guy Debelle (one in Switzerland, plus comments at a panel in London) will be watched for any clues on interest rates. There won’t be because he is talking about the new regulatory/trading regime for global forex trading.
On the corporate front, a quiet week is expected, with half year earnings reports from Aristocrat and NZ based insurer, Tower.
Woodside has an investor day tomorrow, OZ Minerals has its AGM, as does Adelaide and Brighton (all Wednesday).
