Weekly Reports | Sep 21 2012
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.
By Greg Peel
Tonight in the US may see a volatile session, without any fundamental basis. It is “quadruple witching”, meaning the simultaneous expiry of stock options, index options, futures and futures options. It is also an S&P 500 weight rebalancing day, and this time stocks increasing in weight outnumber those decreasing by two to one, implying upside pressure.
When we move into next week we are looking at the last trading week of both the month and the September quarter. It's been a positive quarter for equities, suggesting the potential for profits to be locked in. However given funds are net underweight equities in their portfolios, there is also the potential for stock positions to be quickly increased in order to appease investors on portfolio allocation. So it could go either way.
Beyond that, markets appear to be yet again stuck in a form of limbo. Central banks are underpinning valuations, but a sluggish global economy is providing no impetus to move higher (and in the US case into all-time high blue sky) at this stage. Data remain mildly positive yet mixed in the US, weak in Europe, and on the weak side in China. The US fiscal cliff is now Wall Street's biggest source of concern.
When we hit October we'll enter the next US quarterly reporting season which will provide an interim point of focus. Prior to that, there is a fair bit of US data out next week including the Case-Shiller house price index and pending home sales, the Richmond Fed index, consumer confidence, factory orders, chain store sales, personal income and spending, the Fed Beige Book and the last revision of the June quarter GDP.
It's pretty quiet economically in Australia, with private sector credit a highlight. There will nevertheless be another decent round of ex-divs, with Monday once again being the big day. Thursday will see the expiry of September quarter stock options, which can also provide a bit of volatility.
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