More focus on central banks and interest rates this week as investors continue to wonder whether it is to be pain or gain from here.
Big investors are not convinced in the sustainability of the weak rally (see separate story), Twitter’s stumbling progress towards possible collapse is starting to worry markets, the FTX debacle and other losses in crypto are raising questions about some investment firms and a couple of key commodities took a hit on Thursday and Friday.
At the same time the early results from the monthly surveys of business conditions will be out Wednesday and will provide an update as to the health of activity in economies in Asia, the US and Europe.
There are a few quarterly results to be released, along with quite a few annual meetings in Australia – and at the end of the week America will close for the annual Thanksgiving break on Thursday and then the start of the Black Friday sales season, leading up to Christmas.
Central bank interest rate decisions are expected from the Bank of NZ mid-week – the Riksbank in Sweden and the Bank of Korea.
As well, the minutes of the last Fed meeting three weeks ago will be out mid-week and will be poured over to see if there is any sign of the ‘Fed pivot’ story left. That’s unlikely but there will be a lot of commentary after their release.
In Australia, Reserve Bank Governor Philip Lowe has a major speech on Tuesday in Melbourne.
Governor Lowe’s topic is “Price stability, the supply side and prosperity” and will be watched for any more clues on interest rates.
AMP Chief Economist Shane Oliver says “it is hard to see how he can add anything new and it would be kind of nice to have a speech on something other than the near-term economic outlook and interest rates as it’s been done to death this year!”
The final weeks of the June 30 annual meeting season dominates the next five days with meetings due from BlueScope, WiseTech; Megaport, Harvey Norman, Evolution Mining, Brickworks, New Hope, Liontown Resources, Nick Scali, Queensland Pacific Metals, De Grey Mining, Chalice, Shopping Centres of Australia, Kogan, Qube, Best and Less, Silver Lake and Monadelphous.
Of these companies, trading updates are likely from BlueScope, Harvey Norman, Nick Scali, New Hope (a quarterly report) and Wisetech. Annual results were expected Tuesday from Select Harvests and Technology One. ASX-listed UK bank, CYBG is also down to report this week.
In the US a quiet week except for the Fed minutes (which will generate a lot of publicity). There’s also the surveys of business activity for November and new home sales later in the week which are expected to be very weak.
The second estimate of US third quarter GDP is due later this week. Moody’s economists said at the weekend: ” The Bureau of Economic Analysis’ second estimate of third-quarter GDP is likely to come in at an annualised rate of 2.6%, unchanged from its preliminary estimate.” That’s out Wednesday.
As well there’s durable goods orders and the final consumer sentiment survey from the University of Michigan which is expected to confirm the initial fall.
US quarterlies are expected from companies including Deere and Co, Urban Outfitters, Abercrombie & Fitch, Guess, Dick;s Sporting Goods, Nordstrom, Dollar Tree, Best Buy, Dell and HP.
The Reserve Bank of New Zealand will forge ahead with its aggressive tightening and Moody’s say they are looking for a 0.75% rise (again) which will take the policy rate to 4.25%.
“Inflation remains uncomfortably high in New Zealand despite the central bank being amongst the most aggressive in Asia-Pacific. Demand- and supply-side pressures are elevated.
“The country’s relatively high prevalence of fixed-rate mortgages means that households will not feel the full brunt of monetary tightening until 2023. We have a mild recession baked into the baseline forecast for next year as high borrowing costs alongside elevated inflation cause households to meaningfully retreat,” Moody’s wrote
“The Bank of Korea will likely deliver a 50-basis point increase, bringing its policy rate to 3.5%. High inflation alongside the weak won is encouraging the central bank to hike. Households are sensitive to rising borrowing costs because of their relatively hefty debt burdens,” Moody’s economists also predicted.
