It’s not only a new week but a new month and that means the data and event diary is full to the brim with key releases in Australia and all over the globe.
But a bank holiday in Sydney on Monday which will sap some liquidity from local markets while summer kicks off properly in the northern hemisphere. It’s a time when in the US and Europe traders leave their desks for the Hamptons or the south of France. That makes markets a bit thinner than usual and can increase volatility.
After July that would be no mean feat.
It was a month when oil collapsed 9%, Gold was crushed below $1,080 but recovered to be down only 6% for the month. Shanghai stocks crashed, rallied, and crashed again. The Shanghai Composite finished last week at 3664 down around 400 points or 10% on the week but down just 0.6% on the month. The US dollar only rose 1.9% but that masked the big falls in the Aussie and Kiwi dollars which made six-year lows and the eleven-year low for the Canadian dollar as commodities fell.
On US stock markets the major indices made new highs during the month but on the other side of the ledger the S&P 500 fell down and through the important 200 day moving average. That had traders wondering if this was the start of a big decline but, just like it has for the past 4 years, prices recovered to end the month up 2%. The Dow was down marginally lower, off 0.23% while the Nasdaq was up 2.37%. Europe had a solid month after the agreement to bailout Greece saw the DAX up 2.27% and drove the CAC in Paris up 2.27%. In the UK the FTSE rose 1.67% while in Australia the ASX200 was around 4.4% higher.
It sets up a huge week for traders now.
In Australia even though Sydney trading rooms will mostly be out Monday we still see the release of the AiGroup manufacturing PMI, TD Securities monthly inflation index, as well as HIA home sales and ANZ Job Ads.
Tuesday is one of two huge days for Australian traders with the release of June retail sales, trade and the RBA Board meeting. Practically no one expects the RBA to move rates this month, or any time soon. But that doesn’t mean the decision, or the associated quarterly Statement on Monetary Policy to be released on Friday, won’t attract attention from the tea leaf readers. Westpac chief economist Bill Evans wrote on Friday that “The forecasts for growth and inflation presented in the Statement on Monetary Policy will be of critical interest,” for pricing and expectations on further RBA rate cuts.
His view is the RBA has downgraded Australia’s potential growth rate and so the chances of another rate cut have been reduced.
Wednesday sees the release of the AiGroup Performance of services index. It’s a weird quirk of markets and traders that the focus is always on manufacturing, released Monday, but for mine it’s services that are far more important. That’s because for developed markets it is services and the service based economy that dominates economic activity.
Thursday sees the release of Australia’s unemployment rate. If there is one bright spot in the economy, one most forecasters didn’t see coming, it is the strength of employment in Australia. It’s been very strong in recent months with more Australians working now then every before. That’s a positive but the growth is well above trend so even though the median forecast is 10,000 there is a risk of some disappointment given the NAB business survey employment index is still lacklustre.
Friday we get housing finance and the RBA SoMP.
It’s a huge week for traders in Australia and even though politics doesn’t often impact markets here in Australia the fallout from the resignation of Bronwyn Bishop as Speaker of the House of Representatives is going to be of keen interest.
The movement of the price of energy after July’s crash and the continuing commodity market meltdown is also going to be vitally important to stock traders as the ASX 200 heads back to 5,700, two month highs. Iron ore has recovered strongly off its lows which should mitigate some of the energy, base metal and gold based pressure.
Looking offshore, it is also a big week.
Non-farm payrolls in the US on Friday night is the biggest event every month and this Friday’s release will be no different. Jobless claims just two weeks back printed the lowest release since the early 1970’s which serves to highlight the strength of employment in the US recently. But the debate rages about when the Fed will start to hike rates. That’s because data on Friday showed wage growth hit a record low in Q2. The Bureau of Labour Statistics announced this morning that wages grew by only 0.2% — the smallest quarterly gain since the series began in 1982.
In the lead up though Markit manufacturing PMI is out around the world on Monday. Chinese data will be watched very closely given recent questioning of the official Chinese growth figures. In the US personal consumption expenditure is an important counter point to the ECI on Friday while ISM manufacturing is also out.
Tuesday is not overly exciting offshore with house prices in the UK and PPI in Europe. In the US it’s ISM New York and the Redbook Index. Wednesday traders here in Australia and around the world will be watching New Zealand employment to guage whether RBNZ governor Wheeler’s aggressive rebuttal of banks forecasting multiple rate cuts has any support in the data. It’s also services PMI day around the globe and EU retail sales will be watched closely. In the US we get ADP jobs and ISM non-manufacturing and crude oil stockpiles.
Thursday we get the Bank of England and jobless claims and challenger job cuts in the US and then on Friday it’s the BoJ’s turn to announce a decision on monetary policy. German trade is out along with trade data for the UK. Then, at 10.30pm AEST non-farm payrolls in the US are out.
It’s an epic week. And to cap if off the Wallabies play the All Blacks on Saturday night in Sydney.
Here is Westpac’s excellent diary of all the key events and data.