After a very ugly close in US stocks on Friday last week, the big question for Australian markets and traders is whether the market is racing toward a market crash or, as many are predicting, is this recent 5% pullback in US stocks just your ordinary garden-variety market sell-off with no longer term implications.
This is a week when it could all come to a head.
The decision won’t be made in Pitt, Collins or Queen streets, but rather on Wall Street.
Local traders in stock, bond, commodity and currency markets will all be watching. It means that usually important local data like the NAB Business Survey and the Westpac Consumer sentiment releases, along with the weekly ANZ consumer confidence release on Tuesday and Wednesday will be important, but overshadowed by offshore events.
With that in mind, US retail sales on Wednesday night is probably the week’s number one data release globally closely, followed by the Fed’s Beige book early Thursday morning. In the interim the German ZEW survey Tuesday night and ECB President Draghi’s speech early Wednesday is also noteworthy. Also important is the Philly Fed, Jobless Claims and NAHB business survey Thursday.
Traders will also be watching China closely with the release of new loan, trade and inflation data likely watched closely for signs on the health of the world’s second largest economy.
On the local political front, the federal parliament is not sitting, but that won’t stop a firm focus on Australian troop movements in the Middle East. Nonetheless, treasurer Joe Hockey seems to be in more strife than the Wallabies at the moment when it comes to the Budget and pretty much anything else he touches.
It’s a big week for the market after recent sawtooth moves and a general questioning of the current paradigm of stock valuations. It’s also week closer to the end of QE in the US. That in itself is big enough.
Can stocks base, will the Aussie dollar make fresh lows for 2014 or will markets go into a funk?
Time will tell but in the meantime here is Westpac’s excellent summary of all the data around the globe this week.