AUSTRALIAN DIARY: Everything you need to know about the week ahead for markets

This artistic work shows sailors loading a cannon in the Battle of Santiago during the Spanish-American War in 1898. (Photo by Art Media/Print Collector/Getty Images)

Headline stock indexes around the globe continue to trade in the fairly tight ranges that have increasingly become the norm over the past six weeks. In many ways the intra-day stability which has seen the S&P trade within a 1% daily range during this period belies the continued confusion that surrounds the outlook for individual and the global economies.

Nowhere was that confusion more obvious than in the minutes of the last FOMC meeting release this past week. They showed the Fed is a house divided not sure of itself and whether it can raise rates or the US economy can cope with, or needs, such a move.

It’s something we discussed on the Business Insider Devils and Details podcast last week, where I joined BI editor-in-chief Paul Colgan and BetaShares chief economist David Bassanese. You can listen to it below.

All of this makes this week’s Fed symposium at Jackson Hole the key event for global markets.

Locally traders have the biggest week of reporting season ahead of them and Aussie dollar traders will be wondering why the sellers are suddenly winning the battle.

Another important and interesting week beckons.

Top Stories

  • The ASX reporting season’s biggest week is ahead The ASX 200 has been trading sideways recently. But that doesn’t mean nothing has been going on. That’s certainly the case at an individual stock level as traders and investors adjust to the new information company reporting season has offered.

    And it’s another show-stopper of a week ahead with Matthew Felsmen from APP Securities saying it could be another bumper week. Felsmen says: “Heavyweights to report profit results this week include Fortescue Metals, Oilsearch, Vocus, Wesfarmers and Woolworths. Of the stocks covered by the 8 major Australian brokers, 135 results are due out this week. 100 have reported so far, with 36 beating forecasts and 25 missing, 19 stocks have been upgraded and 38 downgraded. As we have been saying, it only takes an “ok” result with a steady guidance outlook to excite, [and] this is due to a fairly pessimistic view to earnings leading in, and lots of money on the sidelines needing a home.”

  • The Fed’s Jackson Hole Symposium – ‘Designing resilient monetary policy frameworks for the future’.

    Central bankers are doing something that hasn’t happened in 5,000 years — and changing the world economy drastically. So some of the world’s brightest minds are getting together this week to try and understand where central bank policy needs to go for the future. Janet Yellen is speaking and the all of financial markets will be on tenterhooks to see if she gives any indication of the futures path of US monetary policy as the civil war at the Fed continues.

    Already Westpac’s chief economist Bill Evans, amongst many others, say central bank policy isn’t working. So it’s likely to be an interesting few days of speeches and conversations.

    But will anything change? Let’s hope so because current policies don’t seem to be working

Economic Calendar

Australian Calendar – (courtesy NAB Economics, our emphasis)

The local data flow now slows down with only one major release this week. That’s the Construction Work Done survey for the June quarter providing estimates of dwelling, business building and engineering construction as well is public construction expenditure, all potential swing factors for fixed investment and GDP growth in the quarter.

Construction Work Done has been negative in all but two of the past 13 quarters since major project resource construction peaked at the end of 2012. While spending can be very lumpy from quarter to quarter, the commissioning of the three Queensland LNG plants this year is likely to have seen project engineering construction spending decline further. As for the other components of spending in this report, non-residential building investment has recently been declining in trend terms, though there is tentative evidence that non-residential building approvals are beginning to flatten out again if not growing moderately.

Dwelling construction spending has now been rising strongly for the best part of 2½ years with further growth in the development pipeline accumulated over the past year likely to keep dwelling investment high for the time being, providing some support for Construction Work in the June quarter.

Underpinning NAB’s model forecast of GDP growth for the June quarter of 0.3% is a continued assumed contraction in underlying business investment of around 2%, but rising residential Fed
investment, competing forces that continues as a theme in the Construction Work Done report.

Only 0.3%. No wonder the NAB is now forecasting 2 more rate cuts.

International Calendar (also courtesy NAB Market Economics)

US: In an already light week for data the focus will increasingly turn to Jackson Hole. Some housing focus with new and existing home sales and house price reports followed later in the week with durable goods orders, an up-to-date guide on how business investment is faring into Q3.

China: Very light with the MNI Business Indicator, the Leading index, and Industrial Profits.

Euro: Eurozone Manufacturing PMIs and Consumer Confidence, both Tuesday.

UK: The main CBI trends survey on Tuesday and the CBI Retail survey on Wednesday are the main data focus points with the BOE continuing its Asset Purchase program.

Canada: Retail sales and CPI tonight then very quiet next week.

NZ: Wednesday’s trade report comes with new residential lending on Wednesday). The market will also be on the lookout for any change to Fonterra’s 2016/17 milk price forecast.

Here’s the NAB Economic Team’s diary of all the week’s key data and events. Have a good one.

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