Next Week At A Glance

This story features WOOLWORTHS GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: WOW

By Greg Peel

It's a little hard to gauge exactly what might happen from here. Certainly we must expect the initial euphoria of progress on a resolution in Europe must wane a bit, but as to whether this might translate into a heavy profit-taking session at some point is not clear, particularly given the extent of cash sitting uninvested in this market.

And we're still waiting for the colour to fill in the outlines of the plan, which presumably will be forthcoming between now and any announcement post the eurozone finance minsters meeting on Sunday week. So we might just settle for a while as volatility drains out of the market.

In the meantime the US earnings season rolls on, although it begins to thin out somewhat from here on. If we're feeling more relaxed about Europe then Tuesday's round the world session of manufacturing PMI releases can be assessed without such a gloomy, overriding backdrop. Wednesday follows up with a similar session of service sector PMIs. And next week will also be an important one for monetary policy.

It will be a huge day for gambling in Australia on Tuesday, and there's the Melbourne Cup as well. Will the RBA cut? The majority is now leaning that way, and certainly this week's CPI result suggests there's no reason not to. But the central bank has most recently indicated “there is room to cut if needed”. My assessment is that “if needed” pertains to Europe. And on that basis, I will not rule out a cut but I just don't think it's a dead cert. Place your bets.

On Wednesday night the Fed will also hold a policy meeting, and it will be one of the four meetings annually which is accompanied by a press conference. The hot topic will of course be QE3, and one presumes Uncle Ben will simply reiterate recent rhetoric, ie QE3 is an option “if needed”. If Europe's looking safer, and given recent US economic data have been more positive than negative, one would presume QE3 is not needed quite yet.

Next week in the US also sees the Chicago PMI, construction spending, chain store sales and factory orders, and tonight it's personal income and spending. It's also employment week, with the ADP private sector report due out on Wednesday and non-farm payrolls next Friday.

In Australia we'll see private sector credit, house prices, building approvals and retail sales, as well as the PMIs. The quarterly production reports roll relentlessly on and it's another big week of AGMs. Woolies ((WOW)) will hold a Strategy Day and sounds like a new one might be a good idea, and the banks are back in the frame again with full-year results from Westpac ((WBC)) and ANZ ((ANZ)).

On Thursday the G20 leaders will gather in Cannes, presumably to seek an expert opinion on sovereign debt management from Julia Gillard. Jules and Wayne both seem to hold very forthright and no doubt highly informed opinions on the matter.

It's the time of the year when I must make my totally uninformed Cup Pick (personally I consider horse racing to be no more than the government sanctioned redistribution of wealth through criminal means) which I do by trying to find a name that somehow relates to the current state of financial markets. Last year it was all about QE2 so I picked Americain (I never bet, how'd it go?). This year I'd have to say, based on the performance of the shiny metal, Midas Touch? 

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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