Next Week At A Glance

This story features ILUKA RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: ILU

By Greg Peel

As we look ahead to tonight on Wall Street, the question is as to whether the very positive news on the settlement of the Goldman Sachs fraud case and the apparently successful plugging of the oil leak by BP will be enough to overcome the reality of weakening US economic data.

The Goldmans settlement provides a big boost for that stock for two reasons. One is that it ends the uncertainty as to just what Goldmans might have to pay up – uncertainty which has hung like a cloud over the stock while other bank stocks have been recovering – and two it is an extremely good result for Goldmans. The upshot is the bank cannot be sued in a civil court. The $550m settlement is shrapnel compared to what the bank might have had to stump up if it were successfully sued for fraud both criminally and civilly.

The result is also a boost for US financial stocks in general, given Wall Street was further concerned that someone else might be next. The Goldmans case has set a precedent, such that if the SEC decides to charge another bank, Wall Street will expect a settlement to be the result.

Tonight sees quarterly results for both Citigroup and Bank of America, as well as economic bellwether General Electric.

A successful plugging of the oil spill will be a boost for the oil industry, taking a lot of the pressure off despite an ongoing moratorium on deep-sea drilling, a boost for the economic fortunes of the Gulf states in the US, and generally a positive psychological boost for the world.

But ever weakening US economic data is the counterbalance, and probably supports the fact the Australian market is struggling to go anywhere today. Next week in the US sees a lot of housing data, and they have the capacity to be quite weak indeed.

Across the week the US will see releases of the monthly housing market sentiment index, housing starts, building permits, existing home sales and the FHFA house price index. The Conference Board will release its June leading economic indicators index on Thursday.

Global markets may be buoyed by a second rate rise from the Bank of Canada if that is its decision on Tuesday, while in Europe anticipation will build throughout the week ahead of the scheduled release of European bank “stress tests”, due out on Friday.

The stress test issue has split the market, with the optimists suggesting most banks will pass comfortably while the pessimists have suggested the ECB will simply start with an outcome it would like and then set the tests so that most banks pass. So if it turns out that most banks did indeed pass, it still won't convince the critics.

In Australia, next week brings the minutes of the RBA's July meeting in Tuesday, the Westpac leading economic index on Wednesday and the second quarter import price index on Friday.

It's a busy week in regards to production reports from the resources and energy sectors. All of Iluka ((ILU)), BHP Billiton ((BHP)), Newcrest ((NCM)), Santos ((STO)) and Woodside ((WPL)) will report.

For a more comprehensive preview of next week's events, please refer to "The Monday Report", published each Monday morning. For all economic data release dates, ex-div dates and times and other relevant information, please refer to the FNArena Calendar.

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