Start of month business activity surveys, a wealth of economic data here and offshore, December quarter, half year and 12 month earnings reports, house prices here and the first testimony from new Fed chair, Jerome Powell will dominate markets this week as investor wonder about the pace of Fed rate rises and the strength of the US dollar.
4th quarter 2017 GDP reports for Brazil, India, Canada, Hong Kong and the US (its second estimate) are due out this week.
In Australia, the focus this week will be on the end of the December reporting season as well as the will be on December quarter business investment and February’s home price data to be released Thursday.
Economists expect that business investment to have risen by around 1% in the December quarter, and investment intentions data to show further signs of a lift in non-mining investment, as they have been doing now for the past two quarter.
CoreLogic home price data for February is likely to show a further decline in Sydney and Melbourne home prices, according to the AMP’s Chief Economist, Dr Shane Oliver but flat/moderate growth elsewhere.
Dr Oliver said that we can also expect continued moderate growth in credit (Wednesday) and continued solid readings for business conditions in the start of the month surveys on Thursday.
The Australian December half 2017 earnings reporting season will wrap up this week with around 20 major companies reporting including BlueScope and QBE (today) and Adelaide Brighton and Harvey Norman on Wednesday (See separate story).
There will be a couple of major decisions expected this week from the ACCC – the most notable could be a decision on whether Canadian dairy firm, Saputo should be allowed to bid for local group, Murray Goulburn.
In the US, the focus will be back on the Fed and inflation, and there will be a bit of nervousness ahead of new Fed Chair Powell’s first monetary policy Congressional testimony on Wednesday and Thursday, particularly in relation to his comments around interest rate increases.
“I expect that the combination of recent wages and inflation data along with further fiscal easing will add to Powell’s confidence in the growth and inflation outlook leaving the impression that gradual rate hikes will continue but that the Fed is starting to lean towards four hikes this year rather than the three in the “dot plot”, Dr Oliver wrote at the weekend.
"On inflation, the core private consumption deflator for January (which is the Fed’s preferred inflation measure) on Thursday is likely to show a lift of 0.3% month on month, but with a similar rise dropping out a year ago the annual rate is likely to remain at 1.5% year on year.
Meanwhile, new home sales figures are out tonight, durable goods orders, home prices and consumer confidence (all tomorrow), pending home sales (on Wednesday) and the manufacturing conditions index (Thursday).
The US corporate results season will see more retailers releasing results – last week’s weak figures from Walmart will not be encouraging. Macy’s kicks thing off on Tuesday, with Kohl’s, Nordstrom, JCPenney and off-price chain TJX Cos following.
Canada’s federal budget will be released on Tuesday night our time. Watch for aid to the country’s struggling pint and TV sectors, perhaps via a tax on online advertising.
In the eurozone economic confidence readings for February (tomorrow) are expected to show continued strength and unemployment in January is likely to have fallen to 8.6% (from 8.7%) but core inflation (Wednesday) is likely to have remained around 1% year on year which will keep the ECB’s hand off the rate rise looms lever.
Japanese data is likely to show continued strength in industrial production on Wednesday and in the labour market on Friday.
Chinese business conditions PMIs for February on Wednesday are likely to have remained solid.
