Weekly Reports | Oct 07 2011
By Greg Peel
There is light at the end of the European tunnel, and that light is responsible for the sharp rebound in global equity markets this week. One feels the adjustment must soon run its course to a point where markets stabilise and potentially retreat somewhat as short covering is completed and as the flow of “new news” from Europe slows ahead of a definitive plan being delivered for use of the EFSF.
That plan is expected to be delivered at the EU summit on October 17. The timing is only an assumption, and as we know Europe has a habit of making a simple process difficult. Hence there may yet be some more volatility ahead, albeit positive votes early next week for the EFSF from remaining eurozone members Malta and Slovakia might add to the enthusiasm.
In the meantime we have to get past the US jobs report tonight, which as we know has recently provided a deal of heartache. Forecasts at this stage are relatively modest, so given last month's shocker there may well be some room for an upside surprise.
Turning to next week, it's a bank holiday in the US on Monday which means bond markets are closed but equity markets are open, although often quiet. Tuesday brings the minutes of the last Fed meeting – the one delivered by Chubby Checker – but given Bernanke's interim declaration that “whatever it takes” will be rolled out were the situation to turn grim again, those minutes are likely now redundant. Otherwise data highlights next week include the US trade balance and Treasury budget, business inventories and retail sales.
On Tuesday next week Alcoa will release its September quarter earnings report and the quarterly US reporting season will thus begin. The first week is relatively quiet before things really hot up the week after. Are US analysts still overestimating earnings forecasts in the wake of European turmoil? From next week we will begin to find out.
In Australia it's the week of the month when the banks roll out their data series, being ANZ job ads, NAB business confidence and Westpac consumer confidence. We will also see housing finance data and on Thursday our own unemployment report.
China will be back in the frame next week, beginning with its monthly trade balance on Monday and ending with inflation data on Friday.
Across the world, one might expect, investors will have a more relaxed weekend.
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.
