The fallout from US President Trump’s staunch anti-trade rhetoric was still front and centre in global markets to end the week.
The S&P500 clawed back early losses to close 0.5% higher on Friday night — led by moves into defensive stocks and technology companies — but the broader Dow index finished 0.3% lower.
Bonds were sold off as US 10-year yields climbed by almost 7 basis point to 2.87%, reversing the previous days’ gains after Trump’s initial trade announcement drove demand for safe-haven assets.
However, the market reaction to later developments, including Trump threatening to slap a tariff on European cars, could make for a very interesting start to the week on currency and stock markets.
The US dollar index fell for the second straight session to end the week after hitting a six-week high on Wednesday.
That helped to support the AUD, which closed at 0.7763 US cents ahead of a deluge of headline data releases this week.
Key events domestically will be led by a range of partial growth indicators early in the week, culminating in Wednesday’s GDP reading for the December quarter.
Tuesday will also be busy, with the release of January retail sales along with the RBA’s monthly interest rate announcement. No rate move is expected, so the market will be looking carefully at the monthly statement for clues on any shifts in the RBA’s assessment of the global and international outlook.
Internationally, markets will be watching the results of the Italian election to start the week (Monday morning Australian time). There’s also a number of central bank meetings along with US employment data on Friday night.
Partial indicators for Q4 GDP start on Monday with company profits and inventory data. That’s followed by balance of trade figures on Tuesday, where a fall in net exports is expected to drag on GDP growth.
The median Q4 GDP forecast on Wednesday is for quarterly growth of 0.5%, leaving the annual rate at 2.5% following a small miss in the September quarter.
Positive trends in consumer spending and non-mining business investment are likely to be offset by the drag from net exports, according to Commonwealth Bank.
Retail sales data on Tuesday is expected to show a 0.4% rise after a steeper-than-expected fall in December, with steady volumes offset by the impact of increased price competition.
And the RBA is expected to keep interest rates on hold at 1.5% as it awaits signs for a pickup in wage growth.
Also on Tuesday there’s January building approvals data, which has been subject to volatility in recent months following a sharp spike in November — driven by the approval of big projects in Victoria.
Rounding out a huge week of data and key events, RBA Governor Lowe will give a speech on “The Changing Nature of Investment” on Wednesday morning.
And Thursday’s balance of trade data is expected to show a gain in January, after an unexpected deficit in December driven by a surge in imports.
With the results of Italy’s election pending overnight, analysts are forecasting either a hung parliament, or a winning coalition led by the centre-right Forza Italia in an alliance with smaller far-right parties.
Also on Monday in Asian trade there’s February PMI data for Japan and China.
In other key events internationally, the Bank of Canada will hold its interest rate meeting on Wednesday night, with rates expected to be kept on hold at 1.25%.
That will be followed by the ECB’s monetary policy meeting on Thursday. With no changes expected to rate settings, the focus is likely to be on whether there are any changes to the ECB’s forward guidance on its 2018 bond purchasing program.
Then on Friday during Asian trade the Bank of Japan will hold its own meeting, where again no changes are expected to current settings for interest rates and bond purchases.
And the US will round out the week with all-important employment data on Friday night, with the consensus forecast for strong jobs growth in January of 205,000.