The first week of the month is huge for markets, with a raft of data both here and across the globe to digest.
Politics is going to be front and centre locally, as the Abbott government and Labor deal with the fallout from the defeat of Victoria’s one-term Conservative government. The inability of Abbott’s team to cut through with its achievements is one of the key reasons business hasn’t let loose its “animal spirits” amidst a general level of disquiet in the economy.
Peter Hartcher, quoting an unnamed Howard-era Liberal in his Saturday column summed up exactly what is wrong with the Good Ship Abbott and, by extension, consumer behaviour in the economy.
“The first requirement of a government is that it gives the electorate confidence. This government is undermining economic confidence. And on terrorism and national security it has made people more anxious than ever. Where’s the strategy to generate confidence?” the Liberal said.
Politics, the economy, life: it’s the confidences, stupid.
Give the people confidence and with 2.5% cash rates and an RBA increasingly moving toward an easing bias and the economy will improve.
Turning to markets now: it’s a huge week, with the RBA, Q3 GDP, PMIs all around the world, an ECB meeting and policy decision and then US non-farm payrolls to round out the week on Friday night.
Monday: Q3 company profits in AUstralia will feed into the Q3 GDP number Wednesday. But we’ll also get the AiG PMI, TD inflation data and CoreLogic home value index.
All eyes in Asia will be on the Chinese manufacturing PMI and we’ll get PMIs from all over Asia, Europe and the Americas.
Tuesaday: Current account and net-export data for Q3 will also feed into the GDP data and markets will be hanging on the RBA’s statement in the afternoon. Even though they are not expected to move rates, what they have to say will be carefully read.
Wednesday:Q3 GDP should be solid at 0.7/0.8% for the quarter, up from last quarter’s 0.5%, but as Saul Eslake wrote on Friday it overstates growth internally.
Offshore Chinese and other jursidiction services and composite PMIs will be released, along with European retail sales and the ADP employment survey in the US.
Thursday: Look for retail sales for October and an ECB and BoE policy decision overnight.
Friday: Nothing locally, but US non-farms is the most important data release of the month.
It’s a huge start to December!
Here is Westpac’s Excellent diary of the many events that matter this week: