In Australia, Federal Parliament returns this week with a likely agreement on cutting company tax for small businesses expected. But the Wentworth by-election on Saturday is the major event in this country this week.
There’s also the important Chinese GDP and other economic data late in the week, and possible movement on Brexit between the UK and EU, plus an acceleration in the US third-quarter reporting season which will impact the febrile confidence levels in stock markets in the US and worldwide.
The Wentworth result won’t be clear until next week – we should see a trend in counting on Saturday night, with the seat to be likely won by either independent Dr. Kerryn Phelps or Liberal Dave Sharma.
A win for the independent would see the Federal Coalition government become a minority administration like the governments of Julia Gillard and Kevin Rudd from 2010 to 2013.
Before then there’s the September labour market data due Thursday – the AMP’s Dr. Shane Oliver believes we can expect to see to employment growth slowing to a gain of 10,000 after the surprise 44,000 gain in August but with unemployment remaining flat at 5.3%.
Tomorrow sees the minutes from the last RBA board meeting and there won’t be much change from the last minutes – no change but with the RBA still expecting the next move in rates to be up but seeing no case to move now.
The annual meeting season is getting underway – Telstra’s meeting tomorrow will see a brawl over executive pay and a likely ’strike” against the company’s remuneration report.
Australian Pharmaceutical Industries (API) produces its full-year results this week.
September quarter sales, production and exploration reports start flowing this week from BHP, Rio Tinto, OZ minerals, Woodside, Petroleum and Santos.
In the US the September retail sales data is due out tonight – watch for a possible solid rise of around 0.6% from August. Industrial production, job openings, and hiring data are out on Tuesday and should be solid as well.
Dr. Oliver thinks US housing starts (out Wednesday) will fall after a strong gain in August and existing home sales (on Friday) are likely to fall slightly. Housing in the US is worth watching because more and more economists are starting to worry about price weakness in some markets, especially in the luxury top end where there have been sharp falls in prices and sales numbers in cities like New York.
Manufacturing conditions surveys from the US Federal Reserve will also be released for the New York and Philadelphia regions.
Wednesday night also sees the minutes from the Fed’s last meeting will reinforce the point that it remains on track for gradual interest rate hikes ultimately taking the Fed Funds rate to above “neutral.”
The September quarter earnings season accelerates with 54 companies in the S&P 500 reporting this week – the most important will be Netflix’s report early Wednesday morning.
So far as Australia is concerned, the most important offshore data release will be the Chinese production, inflation, investment, and retail sales data for September and the September quarter led by the GDP report.
Dr. Oliver wrote at the weekend the Chinese data “will be watched closely given signs of a slowdown in response to last year’s credit tightening and US tariffs.”
“Expect September quarter GDP data to be released Friday to slow down to 6.5% year on year (from 6.7% in the June quarter), industrial production growth for September to slow to 5.9% year on year but retail sales growth to hold at 9% and investment growth to pick up slightly to 5.5%.
“Meanwhile, inflation data to be released on Tuesday is likely to show a fall in producer price inflation to 3.6% year on year but a rise in consumer price inflation to 2.5%,” Dr. Oliver wrote.
Japanese inflation data for September is also due Friday is likely to show a further rise in core inflation to 0.5% year on year, which is good news but still a long way from the 2% inflation target.
In Europe, the Financial Times points out that tonight is the deadline for countries to submit draft 2019 budgets to the European Commission and “ the Italian submission is likely to garner the most attention” because of its likely budget limit breaking lack of discipline.
At the same time, investors will keep an eye an announcement on Tuesday when EU’s chief Brexit negotiator Michel Barnier updates the region’s leaders in Luxembourg on progress in the Brexit talks which last week was said to be 85% complete.
Watch for discussion on the very sensitive issue of the border between Northern Ireland and the Irish Republic.
This week also sees the latest labor market data and retail sales figures for the UK, as well as inflation figures.
