US Stocks eased a little lower, but stayed near all-time highs, while the US dollar was a little weaker Friday after retail sales undershot expectations. That’s once again questioned the outlook for the US economy and whether the Fed is actually going to be able to raise rates.
Bonds rallied as a result, but the Aussie dollar was a little weaker closing the week under 0.7450 while the SPI 200 futures were off 11 points suggesting a mildly weaker open to a week chock full of earnings reports.
It’s a big week for the Australian stock market – more than 100 companies are reporting. APP Securities Matt Felsman says over “100 companies are coming to market next week with profit reports from the June half, highlights include potential index movers BHP and CSL, Newcrest, Woodside and Santos”.
So far earnings season has been pretty good, Felsman says, and after 2 weeks of reporting of the 38 companies we’ve heard from, “44% beat estimates, 23% missed and a fairly even balance of 11 upgrades and 15 downgrades from brokers”.
But in real terms we are only just now getting into the meat of report season. It could be a big one for the ASX.
Money is finally flowing back into global stock markets. Markets have been in recovery mode for six months since the lows earlier this year when many were forecasting an end to civilization as we know it. Okay, I’m being cynical, but some of the stuff was so hopelessly wrong it could only have been influenced by panic.
Anyway six months into the rally in stocks, US investment house Jefferies reports that “investors became more positive in equities and turned net buyers for the first time in four weeks, injecting a net US$6.3bn into global equity funds/ETFs. Notably US equities experienced a return of inflows while inflows into EMEA and Latin America remain intact.”
No wonder stocks are rallying, and there is plenty of money still to flow into stocks which has Jefferies warning their “global chief equity market strategist Sean Darby has recommended not to short the equity market for the time being and stressed the shape of the yield curve that will dictate equity market performance”.
Australian Calendar – (courtesy NAB Economics)
There will be close focus on Australia’s labour market both from inflationary and growth perspectives with the release of the Wage Price Index for the June quarter out Wednesday, followed by the all-important monthly Labour Force report for July on Thursday.
RBA minutes Tuesday are less important than usual this month because of the release of the quarterly Statement on Monetary Policy two Friday’s ago. But there is always room for a surprise.
Australian Labour Force – July Did you hear the conversation between Paul Colgan, David Scutt and the Kouk in our latest Devils and Details podacst? You know, the one where they worry about how unreliable the labour force data is and Scutty says whats really terrible is that the focus is now on the sample rotation not what’s actually going on in the labour market. Well here’s what the NAB’s economics team says in their preview of Thursday’s big event.
(You can listen in to the podcast here, or subscribe on iTunes.)
The one eighth of the sample that drops out this month had a higher employment-to-population ratio and a lower unemployment rate than the rest of the sample in June. This suggests the possibility that Thursday’s published July employment change could be biased down and the unemployment rate biased up unless the new sample is similar to that which it replaces.
Their guess on July’s number is “12K reflecting that recent recently positive reports from the likes of the NAB employment index and job advertisements pointing to the likelihood of a larger employment outcome than was evident in June”. The market is guesstimating an 11,000 rise in employment and a 5.8% unemployment rate.
International Calendar (also courtesy NAB Market Economics)
US: NAHB Housing Index on Monday, Housing Starts and CPI on Tuesday, FOMC Minutes on Wednesday, Philly Fed Survey on Friday. Four Fed speakers scheduled, Lockhart on Tuesday, Bullard on Wednesday, Dudley gives a press briefing on Friday. Williams also speaks on Friday.
China: July money supply and lending report still due. July property prices on Friday.
Euro: ZEW Survey and Trade on Monday, then CPI on Thursday.
UK: Post-Brexit reports on the economy will be under focus with Rightmove House prices (August), CPI, and PPI (both July) all on Monday, then Retail Sales and Public Finances (again July) on Friday. Wednesday’s labour market report for June also a focus.
Canada: quiet ahead of key Retail Sales and CPI reports on Friday.
NZ: Q2 Labour Market Wednesday the highlight. Also PSI Monday, ANZ Job Ads and Consumer Confidence on Thursday, Net Migration and Card spending on Friday. RBNZ Governor Wheeler speaks on Tuesday but at a closed event. There’s another dairy auction.
Here’s the NAB’s excellent diary of all the key data and events.