It’s going to be a week – no two weeks that will be dominated by the results of yesterday’s first round of the French presidential poll, the looming deadline to lift the US government debt ceiling, a possible tax package from President Trump, the high point of the current US quarterly earnings season.
Now Trump’s ’sources’ say his statement will be a statement of “broad principles and priorities” – in other words more hot air from the President. Of more interest will be how he handles the impending debt ceiling deadline on Friday.
In Australia it will be the impact on local markets of the French poll and the March quarter consumer price inflation data release on Wednesday.
Away from all that and the fall out from the French poll, a number of central banks are due to meet, starting with the the European Central Bank (ECB) and the Bank of Japan (BOJ) which will announce their decisions on policy and interest rates.
And first quarter GDP data releases for a number of countries will add official updates to what last week’s early reports for April on manufacturing activity (weaker for the UK and US, stronger for Japan) surveys have so far indicated.
March quarter GDP numbers are released in the US, UK, Spain, France, Russia, South Korea and Taiwan.
The US and UK figures will be the most important reports and are likely to show a weaker growth trend in the three months to March – especially in the US where growth the annual growth rate could be around 1% (down from 2.1% annual in the December quarter) as retail sales, house sales and car sales have softened a little.
Other key data highlights include US durable goods orders and home prices.
And there are signs that slowdown in the US economy continued into the second quarter with last week’s early reports on manufacturing activity for April showing the slowest expansion in output since September last year.
Economists say these surveys and slowing car and retail sales have raised some doubts about the Fed’s ability to raise interest rates twice more this year, especially if the slowing trend persists.
Preliminary estimates of UK GDP numbers for the first quarter are released next week with last week’s early report on April showing a continuation of the slowing trend from the start of the year and a quarter on quarter growth rate of less than half a per cent, which would be a significant slowdown in the UK economy in the opening three months of the year.
Seeing this is the major data release before the June 8 poll, the figures will underline to some people the dangers of Brexit. But most will ignore this, especially prime Minister May and her government.
In Japan though a different story with recent data releases showing strengthening economic growth and more importantly higher prices. The usual end of month reports on inflation, industrial production, retail sales and unemployment are all expected to confirm the stronger growth outlook for the country. But that won’t see the Bank of Japan making any policy changes.
It is also a busy week in South Korea which not only publishes first quarter GDP data for first quarter, but also updates for industrial production, retail sales and business confidence as well.
The US earnings season picks up steam, with nearly 194 companies listed on the S&P 500 posting results next week. The roster includes Hasbro, McDonald’s, Baker Hughes, Chipotle, Lockheed Martin, Amazon, Microsoft and Twitter (See separate story).
Marketwatch points out that there will be a significant change in the way Alphabet Inc (Google’s owners) reports key financial figures starting with its first-quarter earnings on Thursday.
"Last quarter, Alphabet’s earnings fell short of expectations largely due to tax charges, including one charge tied to its stock-based compensation plan that shaved roughly 83 cents a share off non-GAAP earnings. While announcing those results, Alphabet execs announced the company will begin to emphasize GAAP (Generally Accepted Accounting principles) earnings as opposed to non-GAAP, which allow companies to use accounting gymnastics to exclude stock- based compensation and one-time charges that may have been incurred during the quarter.”
Some investors could panic at the change will will be significant, but the standard profit comparison from now on will be on a GAAP basis (not relying on a comparison of ‘underlying’ figures as so many Australian companies are starting to do.
In Australia March quarter consumer price inflation numbers are will be released on Wednesday. Economists are looking at another small rise – although the impact of the usual changes in government charges will play a bigger impact than normal. Corporate reports are few with the most notable being the long awaited interim figures from the struggling Ten Network on Thursday. A big loss, asset impairment and earnings downgrade for the full year.
As well, sleep products group, Resmed is due to report its earnings midweek and Woolworths and Wesfarmers are due to report third third quarter sales figures on Thursday and Friday.
