The quality of China’s August jobs data holds the key to the week for investors in Australia and around the world.
They will outweigh the new iPhone and revamped iPad and IOS operating systems to be released early Thursday morning, our time, by Apple; the continuing fall in the value of the Aussie dollar, the August jobs report on Thursday and the big strategy statement from Westpac today.
The reports will also have the capability of triggering another sell-off in the Chinese stockmarket, which was closed last Thursday and Friday and missed the weakness, especially on Friday.
Trade data is out tomorrow in China and will show another month of weak exports and weak imports (driven by falling prices). That will see the trade surplus rise.
The AMP’s chief economist Dr Shane Oliver says we can expect headline inflation in China on Thursday to 1.9% year on year due to higher pork prices but non-food inflation remaining around 1.1% year on year.
Producer prices will be down around 5.5% and remain the biggest concern. Deflation has gripped Chinese industry now for well over 3 years without a break.
Dr Oliver says that in a report next Sunday we should expect a stabilisation/slight improvement in growth in industrial production, retail sales and investment (Sunday).
Watch also for a small improvement in housing investment. But Chinese car sales figures out this week will show another weak month for selling and production.
The trade figures in particular have the capacity to give markets a whack if they are worse than forecast.
Watch the production data next Sunday for any impact from closing industry down in and around Beijing for the big end of World War 2 celebrations last week, and before that the world athletics titles.
In Australia the jobs report on Thursday dominates the week – most forecasts say around 10,000 to 15,000 jobs were created last month with the jobless rate remaining around 6% to 6.3%.
The week though starts with the release of the ANZ job ads report for August later this morning.
Tomorrow sees the release of the August business confidence and conditions surveys by the National Australia Bank, while on Wednesday it will be the turn of the monthly consumer sentiment survey from Westpac
Wednesday also sees the release of the July housing finance figures by the Bureau of Statistics. Lending Finance figures will be out Friday.
RBA Deputy Governor Phil Lowe speaks Wednesday at a business lunch, a day after the RBA’s head of financial stability, Luci Ellis. The RBA’s head of financial markets, Assistant governor, Guy Debelle also speaks on Wednesday (in London), so a busy couple of days for the central bank.
And on Thursday the Reserve Bank of New Zealand announces its latest monetary policy decision. Another rate cut has been tipped by quite a few economists, after cuts in June and July.
In corporate news, today will see the release of Westpac’s new strategic plan by the newish CEO Brian Hartzer.
He fronts investors and the investing public this morning and will talk about his plan to shake up earnings and revenues for the bank.
Westpac shares closed at $29.94 on Thursday, more than 12% below their level in May. They fell more than 5% last week. Some investors want to see branch closures and job cuts.
In the US, it is a relatively quiet week on the data front with data for small business confidence, labour market indicators and producer prices and consumer confidence.
The US third quarter earnings season dribbles along.
In Canada, now in a recession, the country’s central bank meets later in the week. After the surprise rate cuts this year in January and July, there’a feeling a third cut won’t surprise.
Brazil and Russia are among the other countries where central banks are setting interest rates this week.
In Asia, apart from the Chinese economic reports for August, the week will be dominated by Friday’s general elections in Singapore. Prime Minister Lee Hsien Loong says he is seeking a mandate to take the Asian financial centre “into its next half-century”.
He is trying to capitalise on the feel-good from the country’s 50th anniversary celebrations. But he and the People’s Action Party face an unprecedented number of political opponents from a wide assortment of rival parties.
His government has been under pressure from concerns Singaporeans have about rising immigration, especially from mainland China. PAP is expected to retain government, but there is a chance it could end up as a large minority party, and Singapore in unchartered waters if that does happen.
In Europe, the Bank of England’s September meeting on Thursday night, our time, probably won’t see a rate rise after a month ago one was tipped by economists.
It will see concern about the timing of a cut, but the appetite globally seems to have vanished for a bit of interest rate hairy-chestedness.
