Stocks in the US just had their best week in years after animal spirits kicked in and “buy the dip” returned, and US companies showed some solid beats on earnings expectations.
The ASX, which had already found buyers the previous week, was dragged higher and it sets up another interesting week’s trade with the US FOMC expected to end QE3 this week.
The end of QE3, or QE-Infinity as many thought it might be, is likely to happen after the FOMC meeting but based on last week’s push higher, markets don’t care in the slightest.
It is still worth remembering the last two times the Fed ended its bond buying program the S&P 500 swooned.
Traders are betting this time is different.
In Australia, preparations continue for Australia’s hosting of the G20 summit in Brisbane next month. There’s been some talk over the weekend, notably in a column by Fairfax’s Peter Hartcher, that government ministers have been theorising about moving Treasurer Joe Hockey out of his portfolio in favour of Malcolm Turnbull. But it’s also dismissed as a fantasy of political tactics – Prime Minister Tony Abbott has been a staunch defender of his Treasurer. Not going to happen, but there’s clearly some continuing frustration in the government ranks about how the budget has been handled.
The RBA’s head of financial stability, Lucy Ellis, is talking at an AHURI conference on Monday night at 6pm.
In the US, Durable Goods is out on Tuesday along with the Conference Board consumer confidence data.
Wednesday sees the release of the increasingly important Westpac – MNI consumer confidence survey and then the FOMC decision that night.
Thursday sees the release of the Australian import and export price data which will be interesting in showing how far and fast the terms of trade is tanking. Later on, German CPI and unemployment are out together with US Q3 GDP which Westpac says whole show a big deceleration on Q2’s solid 4.6% growth rate. The market is expecting a fall to 3% annualised.
Friday ends the week with private credit in Australia along with PPI while in the US personal spending, income and the Chicago PMI round out the week of data.
So as the Aussie starts the week at 0.8794 after a low on Friday of 0.8729, it’s looking surprisingly strong and maybe it and stocks are in for a solid week. In many ways it will depend on Janet Yellen and her colleagues.
We will, of course, have full coverage of the FOMC outcome and its fallout globally and locally here on Business Insider.
Some housekeeping: the Wallabies are on tour in England under the new and sudden leadership of Michael Cheika, with a formidable set of opponents over the coming weeks: the Barbarians (Sunday night our time), then Wales, France, Ireland and finishing with England at the end of November. And when you make your Melbourne Cup Day plans this week, for the Tuesday of the following week, remember there’s an RBA meeting the afternoon of the race too.
And as usual, here’s Westpac’s excellent diary of all the data and events that matter this week.