Another big week ahead that will be dominated to varying degrees by central bank monetary policy meeting minutes in Australia and the US, inflation figures from the UK and China, Russia’s continuing pressures on Ukraine, surging oil and coal prices and Australian labour market data for January.
All this as well as omicron’s continuing presence and more earnings reports, especially here in Australia.
Thursday’s labour force report is likely to show the unemployment rate inched up to 4.3% in January from 4.2% in December thanks to the spread of the Omicron which hit a drop in consumption, particularly in services spending.
Economists think that employment losses last month were smaller than expected by some forecasters and will correct in February.
Tomorrow’s release of the minutes of the February monetary policy meeting of the Reserve Bank will be anti-climactic (watch, though, Bloomberg and the Financial Review try to beat them up into a bigger story than they deserve) because of Governor Phil Lowe’s speech the day after the meeting, the release of the first Statement on Monetary Policy the following Friday and the governor’s appearance before the House of Representatives Economics Committee on Friday.
The December earnings season hits its peak this week with the likes of BHP, Fortescue Metals, CSL, South 32 and Wesfarmers reporting.
In the US it’s the minutes from the Fed’s last meeting that will be poured over (pawed?) by economists, analysts etc to see the extent of the Fed’s ramped up hawkishness on inflation and tightening monetary policy.
With markets febrile about Russia’s aggressive ambitions for Ukraine, and more news on costs (the Producer Price Index is out tomorrow, Tuesday), investors will be nervy and quite likely to jump at shadows.
Rising oil prices will grab attention as they are driven towards $US100 a barrel by Putin’s aggression (and helping boost Russia’ income from its oil and gas exports).
US housing market, retail sales and industrial production data this week will therefore be watched closely so far as the trajectory of US growth this quarter.
Moody’s economists wrote last week “Once the PPI is released (some of its details are source data for the core PCE deflator) we will have a pretty good idea how the Federal Reserve’s preferred measure of inflation did in January.”
“The Fed will have zero tolerance for any upside surprises to inflation this year, therefore the odds of a 50 basis-point hike in March is on the rise.”
“The minutes from the January Federal Open Market Committee minutes will be released. Other key data next week include retail sales, industrial production, initial claims for unemployment insurance benefits, and existing-home sales,” Moody’s economists wrote.
The US industrial production and retail sales will provide insights into economic trends and GDP growth in the first quarter so far, economists from IHSMarkit economists also wrote.
US December quarter earnings continue and will be dominated by big retailers like Walmart and Target, with the highlight though the annual shareholder letter this weekend from Warren Buffett when his Berkshire Hathaway reports (Saturday, US time).
Other companies in the US and Europe reporting this week include, Barrick Gold, Glencore, Marriott, Wynnn Resorts, Autonation, Nestle, Deer and Co, Allianz, ViacomCBS, Zoominfo, Kraft Heinz (26% owned by Berkshire Hathaway), Air BnB, lithium miner, Albemarle, Campbell Soup, Kepco, Renault.
Fourth quarter GDP readings from the eurozone and the UK are also lined up this week, but with Russia continuing to threaten Ukraine and European energy supplies and pricing (and inflation), historical data like growth measures from a couple of months ago will not be taken seriously in the short term.
Industrial production for the EU, as well as UK data on jobs and inflation will be issued.
Chinese inflation data for January will be out mid-week (there will be no production, investment and retail sales for January for China because of the disruptions caused by the Lunar New Year’s holiday break. These will be combined with February and issued next month as one set of data.
Elsewhere in Asia, Japan’s fourth quarter GDP will be the highlight and Moody’s are forecasting 1.6% growth in the 4th quarter from the third which GDP fell 0.9% from the three months to June.
