It is going to be another one of those big weeks for investors, companies and economies generally around the globe as the world’s major central banks meet, US jobs data is released, major media groups report (along with more big oil companies) and surveys of global manufacturing and service sector activity are released.
The Reserve Bank of Australia and the Bank of Japan meet and release their latest policy statements tomorrow (and on Friday for a more detailed version form the RBA); the US Fed releases its statement early Thursday morning after a two day meeting and later on Thursday the Bank of England will release the results of its meeting. And the European Central bank holds a non-policy meeting on Thursday as well.
So in Australia, the RBA is expected to leave interest rates on hold at its monthly Board meeting tomorrow after the slightly stronger than expected inflation figures for the September quarter and the sharp improvement in our terms of trade in the same quarter.
For those reasons (and the progress of the US Fed towards another rate rise in December), the RBA will sit and wait and won’t be changing rates for some time.
The Reserve Bank’s final Statement on Monetary Policy for the year Friday will see little change to the bank’s growth and inflation forecasts for next year.
On the data front, September credit growth is out later today, CoreLogic home price growth figures tomorrow, along with the monthy survey of manufacturing activity. to remain solid. September’s building approvals out Wednesday, the trade deficit on Thursday will be the most interesting of all – will the recent upsurge in commodity prices and demand cut the size of the deficit, as suggested by the improvement in our terms of trade?
September’s Retail sales on Friday will be weak as will retail’s contribution to the quarter’s economic growth.
In the corporate arena, results are expected from the ANZ Bank (full year) on Thursday, Orica on Friday (full year), and BT Investment Management (full year) late in the week as well.
Annual meetings include Fairfax Media, Boral, Downer, Slater and Gordon.
In the US, the Fed will sit on rates and its post meeting statement to be issued early Thursday morning, Sydney time will be closely examined for clues as to what could happen at the December meeting which ends on the 14th of that month.
After US economic growth jumped to an annual rate of 2.9% in the third quarter – double the growth rate in the June quarter. Economists say that should have been enough to convince the Fed to raise rates, even though inflation is still not a worry.
The only qualification would be a really poor October jobs report on Friday – but most forecasts see around 170,000 new jobs being reported and the jobless rate dipping to 4.9%, with another small rise in wage costs.
Tomorrow sees the release of the latest monthly manufacturing activity survey, with the services sector report to be released later in the year. Both will be solid and add to the feeling US rates are going up in December.
US car sales for October though are expected to show a sharp drop – as much as 7% or more as the pace of activity slows for the second month in a row. This will be something to watch as it will indicate that US consumers have exhausted their desire for the latest new car.
The September quarter earnings reports will continue to flow with around 100 S&P 500 companies due to release their figures – look for reports from Starbucks, Time Warner, 21st Century Fox, Lufthansa, Singapore Airlines, Bunge, ADM, Shell, BP, Lowes, the New York Times, CBS, Melco Crown, Commerzbank, Credit Suisse, Soc Gen, Swiss Re and BMW.
In the Eurozone, the Central bank holds a non-policy meeting on Thursday, so no news is expected on monetary policy. The ECB though will be pleased at the general healthier tone to the latest financial reports from the zone’s major banks.
September quarter GDP data for the eurozone will be out tonight, our time and is expected to show continued moderate GDP growth. The first report on eurozone inflation and employment will also be issued tonight. The former is expected to show another small rise, the latter, a small improvement.
The start of month reports on the health of manufacturing will be out tomorrow night, and services later in the week.
And the Bank of England delivers its latest monetary policy update on Thursday evening, our time. After cutting interest rates for the first time in seven years in August, economists expect the central bank will leave interest rates unchanged at 0.25%.
The decision comes as the UK’s first growth figures since the Brexit vote showed that the economy grew in the three months to September, against expectations for a slowdown and as inflation rises.
In Asia Japanese industrial production for September later is expected to show continued growth and the Bank of Japan tomorrow is unlikely to make any changes to monetary policy after the further easing announced a month or so ago, according to the AMP’s chief economist, Dr Shane Oliver. The monthly survey of Japanese manufacturing will be out tomorrow as well.
And the usual two Chinese manufacturing conditions surveys for October are out tomorrow and Dr Oliver says they are likely to remain consistent with a stabilisation in growth, as we saw in the third quarter data of 6.7%.
