Markets will dominate news flow this week around the world, even with China’s nervy bourses closed for the week for the Lunar New Year and others in Asia shut on varying days.
China will be replaced by growing worries about the strength of US tech stocks – which have been the big driver of market activity for much of the past years or more. That boom has peaked and a sell-off seems to be gathering pace as investors re-rate the sector and force valuations lower.
And testimony by Fed chair Janet Yellen in Washington on Wednesday and Thursday nights, our time, will have more than its normal impact because of rising concerns about the health of the US economy and the path of interest rates over the next year.
In the US the December quarter reporting season is peaking – watch out for more media company reports, and the latest update from Twitter midweek which could see tech stocks hammered again if it is offers weak guidance.
But in Australia the reporting season steps this week – so watch for a trio of bellwether reports – the Commonwealth Bank half yearly on Wednesday (and accompanying interim dividend), Rio Tinto’s full year figures on Thursday with a decision on its final dividend, and before both of those, the interim figures from retailing leader JB Hi Fi later this morning.
These three will have a big impact on the wider market and sentiment given their key positions in their sectors and the way investors look to reports from these and other leaders for reassurance.
In fact over 40 major companies are due to report this week in Australia (and well over 100 in the US). The reporting should outweigh news from the economic data, although on Friday Reserve Bank Governor Glenn Stevens makes his first appearance for the year before the House of Representatives economics committee.
Today the ANZ jobs report is released (but the monthly employment report from the Australian Bureau of Statistics (ABS) is next week). As well, the NAB business survey’s confidence and conditions reports are out tomorrow and the monthly consumer confidence update from Westpac is out on Wednesday.
Housing finance figures from the ABS are due on Friday for December and 2015. The Housing Industry Association will release figures on new home sales tomorrow, while on Friday the ABS also released the latest arrivals and departures data for December.
In the US, labour market indicators for job openings and hiring (Tuesday night) will give a guide as to how the labour market is holding up and January retail sales data on Friday night (our time) are expected to show modest growth. But will it be enough to signal that the US consumer is doing more than they have to keep a sluggish economy growing?
Business inventory figures on Friday will be closely watched because of the negative impact they had on GDP in the 4th quarter and the suspicion that manufacturers, wholesalers and importers (plus retailers) are finding it harder to sell their products. Of course, reasonable inventory figures will brighten the outlook for investors.
In the eurozone, data is expected to show modest growth is continuing with December quarter GDP (Friday night). The AMP’s Dr Shane Oliver says the report is expected to show growth of 0.4% quarter on quarter or 1.6% year on year.
Despite the holidays, Chinese credit data this week will be watched for signs that monetary easing is continuing to support credit growth in January. The big data dump for January starts early next week, once the holidays are over.
