The US Fed’s meeting and the Scottish independence vote will dominate the coming week here and around the world. Nothing much else will matter to investors as volatility returns to the forex and bond markets, while commodities drift lower and equities mark time.
In the US, the main event will be the Fed’s meeting (Wednesday and Thursday, our time) which is expected to see the US central bank confirm the ending of the tapering of its quantitative easing program by another $US10 billion a month, leaving only $15 billion to be cut, which should happen in October.
The market (and the Fed’s) view of the health of the economy will be tested this week by the release of the latest data on industrial production (tonight, our time), the New York and Philadelphia regional manufacturing surveys (tonight and Thursday night, our time). Producer price figures for last month are also due tonight, our time.
The August Consumer Price Index out Wednesday night our time is expected to see inflation unchanged on an annual rate of 1.9%; another slight rise in a key homebuilder index (Wednesday night our time), and watch for a small slowing in housing starts last month (Thursday night, our time) after a very strong July.
These figures, the Fed’s statement, and the run up to the Scotland independence vote will make for a week of rising volatility across all markets.
In the sharemarket – apart from the impact of the above, the biggest event is what looks like being the largest ever float anywhere – the giant Chinese website group Alibaba lists in New York on Friday night our time.
Early estimates say the float could be valued at $SUS24 billion – larger than the IPO’s of Facebook and Visa. The shares will be priced on Friday night our time.
The upbeat view of Alibaba could be hit if the markets don’t like the Fed’s statement and approach or if the Scots vote for independence (a move that could through financial markets into confusion).
The US reporting season staggers on with some major tech and industrial companies reporting. The tech stocks include Adobe, Oracle, Apogee Systems and Red Hat.
But attention will be on transport giant, Fed Ex, which reports its first quarter figures Tuesday night – that will tells us how the huge logistics chains from China and the rest of Asia and the US are performing.
Food group, General Mills is also due to report, along with home builder, Lennar Corp.
In Britain, a day after the Fed’s statement is released, we get the independence vote in Scotland, or what Dr Oliver nicely called the "Scottish independence madness".
In Australia, the minutes from the RBA’s last meeting (tomorrow) are likely to repeat the “period of stability” on interest rates mantra and are unlikely to add anything new given the speech Governor Glenn Stevens delivered in Adelaide at the start of the month.
A speech by the bank’s Assistant Governor (economics) Chris Kent is also due tomorrow, and that will be watched for any further views on the economy.
As well, the RBA releases its quarterly bulletin on Thursday.
There are not many statistics out in Australia this week – car sales for August later today is the most important.
Annual results will be released by two retail-related stocks Premier Investments on Wednesday, which will have report a big on/off profit from its play in David Jones and its stake in Country Road.
On Thursday OrotonGroup releases its full year results.
In Europe, besides the Scotland vote and the Fed’s meeting, the big story will be the European Central Bank’s cheap funding operation for banks on Thursday.
There will also be confirmation of the August weak consumer inflation data (0.3%) is expected midweek.
Inflation figures for Britain are due out tomorrow night, our time.
Retail sales figures for the UK will also be issued on Thursday, while Friday sees current account data for the eurozone.
The Swiss National Bank and the Norwegian Central Bank announce their latest interest rate decisions Thursday night, our time.
In Asia, it’s a quiet week for major data releases.
Thursday sees trade data to be issued in Japan, with another weak set of figures expected.
China will release house price data on the same day, which will confirm the continuing weakness and worry markets.
These are likely to maintain the air of gloom about the outlook for Chinese property and the health of the economy.
