There’s a lot to rattle or enthuse markets and investors this week. We have bank profits and consumer inflation in Australia, the US third quarter reporting season and some big tech and oil companies down to reveal results, more antics from President Trump and his tax plan’s progress; a meeting of the European Central Bank (ECB) and a decision on quantitative easing; Early GDP reports from the US, UK and South Korea; the continuing fall out from the separatist struggles around Catalonia in Spain, the Kiwi election result and the aftermath of yesterday’s easy Japanese election win by prime Minister Abe.
In Australia the ANZ is the first of three major banks to reveal its full year earnings later this week and Macquarie Group will produce its half year figures a day later on Friday (See separate story).
Wednesday sees the release of the September quarter’s Consumer Price Index and as we explained on Friday it could be bigger than most recent rises.
We can expect higher energy (gas and electricity) prices to push CPI inflation up 0.8% in the September quarter or 2% year on year.
However, according to the AMP’s Chief Economist, Dr Shane Oliver we can expect underlying inflation to have remained soft at 0.5% quarter on quarter “ hanks to ongoing pricing softness in response to constrained demand, weak wages growth and the rise in the value of the $A”
He says this should still take underlying inflation back to 2% year on year though which is at the bottom of the RBA’s target range (after 1.8% year on year in the June quarter). Data for skilled vacancies and producer prices will also be released.
There’s some important company annual meetings – Crown Resorts on Thursday lead the way, along with the likes of Tabcorp and Tatts – with the Tabcorp meeting today expected to reveal an update on the timing of the $11 billion merger with Tatts (Thursday).
Other companies due to hold meetings include GUD Holdings, Vocus, Qantas (Thursday), Stockland, Fletcher Building (in NZ) and Whitehaven Coal.
In the US, the October Markit business conditions (out tomorrow night, our time) survey results are expected to again be solid and show the US economy is still expanding, a view that will be supported by durable goods orders and house prices (out Wednesday night, our time). New home sales (also Wednesday) and pending home sales (Thursday) are likely to have been cut by Hurricanes Nate, Irma and especially Harvey.
And the hurricanes are likely to have resulted in a small fall in the first estimate of US September quarter GDP growth Dr Oliver sees an annual rate of 2.5% from 3.1% in the second quarter, but with a bounce back this quarter.
Donald Trump’s nominee for the next Federal Reserve chair could be named this week.
In the Eurozone, the focus will be on the ECB which Dr Oliver says “is likely to announce that quantitative easing will be continued for another 9 months from January 2018 at the reduced rate of €30bn a month with a reaffirmation of forward guidance that rates won’t be raised until “well past” the ending of QE.”
He said to watch for whether the ECB indicates that this will likely be it for QE or whether the door will be left open for another extension if needed.
On the data front, the October business conditions PMIs for the eurozone (tomorrow night) are expected to have remained strong, pointing to continuing solid economic growth.
In the UK the so-called “flash estimates” of third quarter GDP will be released and will be one of the last major data releases before the Bank of England’s policy meeting next week. Economists say the GDP numbers could show another lacklustre 0.3% expansion in the three months to September.
Japan’s election saw PM Abe’s LDP led coalition comfortably returned – in fact the government will have the two third majority required for changes to the constitution. Inflation data is out on Friday and Japanese core inflation is expected to have remained low at around 0.2% year on year.
In China the focus will be outcomes from the Communist Party Congress but it’s doubtful that it will signal anything unexpected. Property price data will be released Monday and industrial profit data on Friday.
