In Australia, the initial focus this week will be the outcome of the Federal election, especially the shape of the Senate.
That is not likely to be known until next week when the final distribution of preferences takes place.
The ALP will have to find a new Federal Opposition leader and presumably policies.
Apart from the political, there will be a timely reminder of the much bigger policy – monetary policy – specifically interest rates, weak household spending, weak wages growth, but soaring iron ore prices (see separate story).
Tomorrow sees the release of the minutes from the last RBA board meeting on May 7 and a speech by RBA Governor Lowe in Brisbane – both happen tomorrow.
The media will go its usual gaga self about the minutes but there will be nothing new in those that weren’t in the second Statement on Monetary Policy for the year released earlier this month.
Governor Lowe’s speech is entitled The Economic Outlook and Monetary Policy and will be more up to date than the minutes (which will not reflect the April jobs data or the weak Wage Price Index for the March quarter).
But his speech is expected to see some sort of confirmation of a shift towards an easing bias on interest rates ahead of rate cuts in the months ahead.
On the data front, March quarter construction data will likely remain weak with another fall of around 1% quarter on quarter. Data for skilled vacancies and the late month business conditions surveys will also be released.
On the corporate side an active week – Elders and Incitec Pivot report today – both are tipped to show results impacted by the drought, especially Incitec which has already downgraded earnings a couple of times. They are due to report later today.
Brisbane-based companies, Technology One, and ALS are due to release results tomorrow – ALS’s figures should be positively impacted by the rebound in mining.
Thursday sees the release of results from poker machine maker, Aristocrat Leisure, while Australian Agricultural Co is down to release figures as well.
In the US the trade war with China will continue while the minutes from the Fed’s last meeting on April 30/May 1 will be released and are likely to confirm its neutral bias on interest rates.
On the data front, existing home sales (Tomorrow), new home sales (Thursday), business conditions surveys for May (also Thursday) and durable goods orders (Friday).
A few more retailing results from US retailers will dribble out this week. These will include Home Depot, Lowe’s Cos, Target, TJS Cos, Kohl’s Best Buy, Deckers, Gap, Ross Stores, Nordstrom L Brands, and Williams Sonoma. Other results include HP Inc and Hormel Foods
European parliamentary elections start on Thursday (and end on Sunday) and will see a lot of hype around Eurosceptics winning seats, but the AMP’s Chief Economist, Shane Oliver says we shouldn’t read too much into it.
“The EU elections tend to see a higher turnout from motivated Eurosceptic voters, Eurosceptic/nationalist parties will still only get around a quarter of the seats, most of them are not serious about leaving the EU and/or the Euro (the Italians and Eastern Europeans) or are irrelevant (those from the UK).
“The EU Parliament doesn’t have a lot of power and in any case, popular support for the Euro across the Eurozone has been rising and is strong at 75%.”
In the UK this week is likely to see more pressure on Prime Minister May to resign ahead and in the wake of the European elections.
The rightwing Austrian coalition government fell apart at the weekend in the midst of an influence peddling and corruption scandal that forced the resignation of a far rightwing leader and new elections. That could impact the gains by the right in Austria.
Meanwhile, Eurozone business conditions PMIs (also due Thursday) will be watched for further signs of stabilisation.
In Asia, Japanese March quarter GDP growth later today is expected to show a small 0.1% dip continuing the up-down pattern of the last year. Annual growth will be just 0.3% year on year. Industrial production data for April will also be released today. April inflation figures are also due later in the week
And the Indian elections wrap up this week.
