Weekly Reports | Mar 25 2011
By Greg Peel
Both the US and Australian indices have regained all the ground lost as a result of the Japanese earthquake. This implies (a) the market no longer sees an immediate nuclear disaster threat; and (b) the long term GDP growth implication of Japanese rebuilding negates, or even exceeds, the short term lost GDP impact.
Given the deteriorating situation in Portugal also arose during this time, the market is also now assuming Portugal will be bailed out by the EU and that is a good thing. It removes the uncertainty surrounding Portugal and the old “domino effect” worry, and given there is now more money in the EU bail-out fund for just this purpose, there is no net cost.
EU leaders gather tonight for a scheduled meeting and Portugal will no doubt be high on the agenda.
That just leaves MENA as an immediate global influence, and there one feels the fact there has been no significant change in the situation, and the oil price has largely stabilised, that markets have moved on from worrying about it. Anything could happen of course, but with the US VIX volatility index back at 18 it seems no one's losing any sleep.
Tonight in the US the fourth quarter GDP result will be revised for the last time, and economists expect an increase to 3.0% from 2.8%.
It's another busy week of data releases next week in the US. Releases include pending home sales, private income and expenditure, the Case-Shiller house price index, consumer confidence, factory orders, and the Chicago PMI. It's also unemployment week, meaning the ADP private sector number is released on the Wednesday and the official non-farm payroll number on the Friday.
Friday is also global manufacturing PMI day, with results from all of Australia, China, the UK, eurozone and US.
Australia's economic week is concentrated on the Thursday, when we see building approvals, private sector credit, retail sales and the house price index.
We are also now in the middle of AGM season in Australia, with next week offering up mostly smaller companies.
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.
