Next Week At A Glance

This story features COMMONWEALTH BANK OF AUSTRALIA, and other companies. For more info SHARE ANALYSIS: CBA

 By Greg Peel

What can we expect from tonight's trade in New York?

For starters, there is some talk on the business channels about there needing to be a bounce on Wall Street tonight given the 1000 point drop in the Dow at its low last night was merely an error and thus not “real”. However, be not mistaken that the 350 point loss at the close was very real and indicative of the true fundamental sentiment. The Dow had already posted such a loss before the error occurred mid-afternoon.

It is thus no surprise that as I write the ASX 200 is down 100 points. If there were to be a bounce in the US tonight of any substance it would be based on perception that last night's trade represented a capitulation session into oversold territory with added anxiety from errors as reflected in the 30% jump in the VIX volatility index. But it would be a brave soul who can at this point call the temporary bottom. The situation in Europe is far from resolved and uncertainty remains. We can only note that the European stock markets did not fall by as much last night, albeit bond markets crashed again in reflection of the ECB's failure to do anything at all.

The US jobs number is released tonight so this could provide fuel for either more selling or a turning point depending which way the coin falls.

Moving onto next week, the highlight in the US will be another round of Treasury bond auctions amidst a week of scant economic releases. The Treasury is auctioning US$38bn of three-year notes, US$24bn of benchmark ten-years and US$16bn of thirty-year bonds. One presumes there will be a different complexion to this auction round, counter to the recent trend of falling foreign demand, given the US is once again the last safe haven outside gold, deficit or not.

Next week also sees US wholesale inventories, the trade balance and the government's monthly budget deficit. Friday will be the big day, with business inventories, industrial production, retail sales and the first Michigan Uni consumer confidence measure for May released.

Wednesday will be important in Europe, as if it needed anymore attention, given the release of the first estimate of eurozone first quarter GDP. One presumes that at some point next week we will also learn who, if anyone, has won the UK election. Furthermore, the German state election which could upset the balance of power in the Bundestag is being held this weekend.

China will also be in the spotlight next week, and realistically this is not the week we want to hear about tightening measures actually working. By the same token, if the numbers are strong then further tightening measures will be anticipated. Across the week, with a concentration on Tuesday, we receive the monthly round of Chinese data including industrial production, retail sales, investment, PPI and CPI.

Tuesday night is Budget night in Australia so there's another source of potential volatility, if the Henry debacle to date is any guide. We will also have ANZ job ads, the NAB business sentiment survey and home loan data along with the unemployment figures on Thursday.

In focus on the local stock front will be a quarterly update from CommBank ((CBA)), an interim result from Incitec Pivot ((IPL)), a full-year result from CSR ((CSR)) with supposedly an update on the demerger, and the AMP ((AMP)) AGM which may or may not mention the current AXA-AP ((AXA)) position.

It will not be a quiet week.

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, result dates and times and other relevant information, please refer to the FNArena Calendar.

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