Weekly Reports | Aug 30 2013
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By Greg Peel
Things are Syrious but for the moment, stalled. A decision on Allied retaliation against the Assad regime will not be made until at least early next week, it seems. While this has provided global markets with some breathing space after an initial adverse reaction, the delay also strengthens the possibility of a non-military solution. But nothing is certain.
Complicating this issue from a market perspective is the Memorial Day long weekend in the US. Given Fridays before long weekends tend to be nothing days on Wall Street, with everyone running away early, we almost have four days of no US lead to follow. Hence US stock markets appeared to square up last night, and other markets followed suit. The square-up is not just about not wishing to take the worry of positions away on the last weekend of the summer break, but also not wanting to risk some Middle East development over the period.
Then there’s the tapering issue, which seems to be ever more confusing. One minute Wall Street runs scared from taper-talk, and the next minute stocks rise on positive US data, which should increase the likelihood of early tapering. It’s a very hard one to call.
Syria or not the world rolls on, and tonight in the US sees personal income and spending data, along with the fortnightly consumer sentiment measure. On Sunday Beijing will release the official Chinese manufacturing PMI for August, given it is the first of the month. Australia, the eurozone and UK will wait until Monday, while the US will have to wait until Tuesday. The Chinese service sector PMI is then released on Tuesday with everyone else’s on Wednesday, except for the US (Thursday).
The US will also see vehicle sales, construction spending, the trade balance, chain store sales and factory orders across the shortened week, but more importantly the August jobs numbers are due. The private sector result is due on Wednesday and non-farm payrolls on Friday. While the Fed’s Beige Book release on Wednesday may provide some further tapering clues, it is the jobs numbers which really matter.
But the as to how Wall Street might respond is anyone’s guess at this point.
In Australia, it’s GDP week. With the result season effectively done and dusted it’s back to focusing on economic data and RBA policy implications. Monday sees June quarter company profits and inventories, Tuesday brings the current account and net exports, and on Wednesday the big one drops. In between there’ll be monthly data on manufacturing, services and construction, building approvals, retail sales and the trade balance. Never rains but it pours.
And the RBA will meet on Tuesday, a day before the GDP release. Will the board wait, or go? Of course it’s the last week before Saturday’s election (shoot me) and while not unprecedented, it is assumed the RBA will hold off on a rate cut until at least October, given potential fiscal implications.
The Banks of Japan and England and the ECB all hold policy meetings on Thursday.
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