This week sees the start of the last month of what has been a rough, tough, and historic year – bushfires and COVID in Australia – COVID, and unrest in many other parts of the world. Bust in sharemarkets as governments and central banks supported and in many cases, staved off Depression.
After the bust, boom, and market records, huge gains in November, all thanks to central banks and the hope to a stronger end to 2020 than the hesitant start that was waylaid by the pandemic.
Now that boom now seems to be spreading deeper into commodities (see separate story).
But the continuing rise in coronavirus infections and related deaths in the US, Europe, Japan, Canada, South Korea remains with us and will be the dominant areas of interest for markets heading into 2021, along with the enormous hope placed on new vaccines and their approvals.
Globally this week there’s the start of month surveys of manufacturing activity, followed by a similar survey of service sectors – economists say most should be solid – especially manufacturing, although service sector activity is likely to be weak where COVID-19 infections remain a curse.
There’s also a meeting of OPEC members and its allies to discuss the current cap on production which is supposed to be lifted by 2 million barrels from January 1.
In Australia the dominant news will the final monetary policy meeting of the year for the Reserve Bank tomorrow, the September quarter National Accounts and GDP on Wednesday and a host of major economic data releases on retail sales, trade, house prices, manufacturing activity, bank lending and possibly car sales (see separate story).
RBA governor Philip Lowe appears before the House of Representatives Economics Committee on Wednesday in Canberra.
In the US, November’s jobs data due Friday will be the focus with forecasts for a 500,000 gain in payrolls expected along with a further fall in unemployment to 6.8%, according to forecasts from AMP Chief Economist, Shane Oliver.
Though other economists caution that the recent steading of jobless claims at more than 700,000 a week indicates the US labour market is softening.
In other data expect a 1% gain in October pending home sales (Monday), a slight fall in the manufacturing and services surveys (due Tuesday and Thursday) to still solid readings of around 58 and 57 respectively, according to Dr Oliver.
US car sales data for November will be out tomorrow and Wednesday.
Another highlight this week will be Tuesday’s testimony from Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin before the Senate Banking Committee. They will be discussing the emergency measures taken to help the economy after the outbreak of the pandemic.
High on the list will be Mnuchin’s partisan move to take over $US400 billion from the Fed and transfer it to the Treasury (to make it available for a Republican stimulus package, thereby denying the Fed funds to continue lending to business).
In Europe Eurozone core inflation tomorrow is expected to have remained weak in November at around 0.2% year on year and unemployment (on Wednesday) is expected to increase slightly to 8.4%
In Asia, Japanese industrial production data (Monday) will be watched for further recovery and jobs data will be released Tuesday.
Chinese business activity surveys for November (due Monday, Tuesday, and Wednesday) are likely to have remained solid consistent with growing economic expansion.
