A week for economic figures here, the US, Japan and Europe, but more importantly it will be the end of the worst financial year any investor can remember.
At the risk of being stoned by cliché haters, it was a financial year of two halves: a terrible first half; actually a terrifying December quarter is more the case where all the damage was done.
The March quarter of this year wasn’t much better, but the seeds for the rebound were appearing then, producing a scattering of green shoots, which made the current quarter the best for a couple of years.
And the sustainability of those shoots will be the subject of most speculation and commentary this week, thanks to the flow of significant data.
In fact the immediate strength of those shoots and the market rebound will be decided this week.
Australia sees a flood of figures for May that will hopefully tell us the recent strength is continuing; the US will see jobs figures and other data that will hopefully confirm things are still steadying.
Japan will issue a group of figures that might tell us that the economy is a bit better than deeply depressed, and recessed Europe will probably learn that inflation remains a threat, but not now, and that a bout of deflation could be on the cards.
In Australia, data for new homes sales, private sector credit for May, retail trade and building approvals, also for May, skilled vacancies and the trade balance (also for May) will be released.
Building approvals will likely show a further gain reflecting the strong rise in housing finance over the last six months and retail sales are likely to have been further boosted by the payments to households from the second fiscal stimulus package.
April retail sales were up 0.3%. The Reserve Bank’s private credit measures showed a rise of 0.1% in April, thanks to a sharp 0.7% rise in home lending. Business credit was down and nothing much is expected to have changed in May.
April also saw a sharper than expected fall in the trade position. That’s because of lower prices for iron ore and coal (now adding to the deflationary pressures in China and Japan).
That’s not expected to have changed very much either in May and if anything the trade position may have worsened.
We will also get the start of the monthly surveys of conditions in manufacturing here, in China, Europe and the US.
China’s will be watched to see if the small rises seen in recent months, is continuing, or whether there’s been a levelling off, as some analysts fear.
In the US, the focus is likely to be on the ISM manufacturing conditions survey and labour market data.
US Markets will be closed on Friday, July 3 to mark the Independence Day holiday the following day, so all the week’s numbers will be crammed into four days.
The employment report for June will be released the day before, on Thursday, a day after the expected release of car sales figures for June and for the first half of 2009.
The employment report will shed some light on whether the economy has simply stopped getting worse or is actually starting to show signs of improvement.
Jobless numbers seem to have slowed (But not last week), and regional business surveys have pointed to an improvement in the conditions and activity, but the question is whether this will be enough to push the reading into positive territory.
Around 355,000 jobs are estimated to have been cut last month, versus May’s drop of 345,000, according to economists polled by Reuters.
Unemployment is expected to rise to 9.5% or 9.6%, according to surveys..
Besides the aftermath of Michael Jackson’s death, the major non-data event will be the sentencing tonight, our time, of Bernie Madoff, the man behind the biggest con of all time, his $US65 billion Ponzi scheme that masqueraded as an investment fund.
As well as the ISM survey for manufacturing and the jobless numbers, this week also sees the S&P/Case-Shiller reading on April home prices (tomorrow night), the Chicago Purchasing Managers Index of June business activity in the US Midwest, and the Conference Board’s June consumer confidence report.
Figures for pending home sales for May, May construction spending and June domestic car and truck sales will also be released, as well as the weekly initial jobless claims and figures for factory orders in May.
The European Central Bank meets Thursday night, our time.
It won’t touch rates which are at a low 1%, especially after injecting $442 billion in one year money into the banking system of the eurozone last Thursday to try to get banks to lend.
Japanese data for industrial production, retail trade, employment and the Tankan survey will be released and will show an improvement (But not in employment), with the economy probably showing some tentative signs of expanding.
But last Friday’s terrible consumer price index figures showing a 1.1% fall (deflation) in the year to May, is a sign of just how depressed the economy really is.
In Europe there will be trading updates from Marks & Spencer Group, the UK retailer, Sodexo, the world’s largest catering company, while HMV Group will publish preliminary full year results. Nestles has an investors update as well.
European consumer prices for June will be released and economists are looking for a fall of 0.2% after the zero reading in May.
