For what would normally be a quiet week for markets and economic news – well, apart from the continuing assault on Ukraine by Vladimir Putin and his armed forces and the impact that is having on all markets – there’s one release later this week guaranteed to grab the headlines.
Attention will be on the so-called ‘flash’ or early data releases from monthly business activity surveys on Thursday.
Normally these early releases are fairly ho-hum with most economists and analysts waiting for the normal full data release on the first day of the next month.
This month these reports will be very different and are eagerly awaited because they will give us the first insight into how the Russian invasion – which came too late for the February survey, has impacted manufacturing and service sector activities in a number of key markets.
Countries where flash reports will be released include Japan, Australia, much of Europe (France, Germany, the UK) and the US.
There’s the dislocation to politics, consumer confidence and business activity for economies that have already felt the brunt of a pre-invasion surge in inflation, especially fuel and energy costs, which has worsened since February 24.
The flash reports will give a first look at economic conditions since the outbreak of the Ukraine war, as will a series of central bank meetings, Fed speakers (topped by chair Jay Powell) and including the RBA’s Philip Lowe.
After last week’s rate rises from the Fed and the Bank of England, central bank meetings are scheduled in Switzerland, Norway and the Philippines.
UK, Singapore and Malaysia inflation figures will be updated for February but also watch out for US durable goods orders, US, UK and eurozone consumer sentiment, US fourth quarter GDP revisions and production data out of Taiwan and Thailand.
The major spillover from the invasion had been inflation and the volatile surge in energy prices – and then a near equal retreat.
A greater uncertainty will be the resilience of economic growth against the headwinds of these higher borrowing costs, a widespread cost of living crisis, geopolitical stress from the invasion of Ukraine, China’s latest COVID-19 shutdowns, financial market volatility and the withdrawal of pandemic fiscal stimulus.
As well providing the first major glimpse into economic growth, supply chains and business confidence following the invasion, the flash PMI business surveys will provide further guidance on the how inflationary pressures are continuing to build, especially relating to the potential passthrough of higher energy and other commodity prices through the supply chains to consumers.
In Australia besides the flash activity report on Thursday morning and Governor Lowe’s appearance at a media awards function on Tuesday, there’s very little data or other events.
There are also several leading corporate profit results – Premier Investments (which has already upgraded its revenue and earnings for the half year to January 31), KMD Brands and Sigma Healthcare. Linked companies, New Hope, Brickworks and Washington H. Soul Pattinson are also due to report their interims.
In the US Fed Chair Powell speaks tonight our time and will be watched for more commentary on the central bank’s tightening cycle. There’s pending home sales data (Wednesday and Friday) durable goods orders (on Thursday) and the business conditions survey. The third and final estimate of US 4th quarter GDP will be released.
The final March University of Michigan consumer sentiment survey is out this week and will be examined to see if the fall in confidence in the preliminary report because of rising petrol prices, has continued and the damage it has done to consumers expectations, spending and confidence.
In Europe there’s the consumer sentiment surveys, the activity surveys, data on GDP from Spain, jobs in France and the UK.
But the data report that will be most closely watched will be Russia’s industrial production for February. Moody’s economists expect an 8% rise in the month, slowing from the 8.6% rise in January. “The effects from the military conflict in Ukraine will not show up yet in the February release. In March, however, we are expecting a significant drop in output.”
Russia’s central bank kept its key interest rate steady at 20% on Friday and claimed that had stabilised the country’s financial markets and economy after the trouble collapsed in the days after the invasion.
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Another issue is the continuing Covid infection rate in China – the government and its media mouthpieces keep claiming it is under control, but case numbers are not dropping (still low by China’s previous infection) but the first deaths for more than a year were reported at the weekend.
The official media keeps assuring readers that its all under control fo the zero policy of President Xi is the way to go – but with the elimination principle slowly being changed to surviving with the infection – after all why are rapid antigen tests being produced in their tens of millions a day and handed out free, and the Pfizer Covid treatment pills rushed from the US to be used straight away (even before Chinese companies can make a knock off).
Covid cases are rising in other countries, but China, because of its importance in global supply chains and the fact it struggling to control the worst outbreak in two years, is a special case that the world is watching.
