Tag Archives: China and Emerging Markets

article 3 months old

The Overnight Report: All The Wild Horses

By Greg Peel

The Dow closed down 48 points or 0.3% while the S&P lost 0.6% to 2018 as the Nasdaq fell 0.8%.

Late Buying

The lead out of Wall Street on Tuesday night was not such much weak as indifferent, as US earnings reports fail to either inspire or spark fear on a net basis and data releases are now less pressing given downgraded Fed expectations. If markets can’t find any particular reason to go up, they tend to go down until a reason emerges.

Bridge Street thus drifted off from the open yesterday, with a little help from lower commodity prices. BHP Billiton ((BHP)) posted a quarterly report showing strong iron ore volume growth, but met broker expectations. The real test came at lunch time when the ASX200 drifted below the 5200 level – previously strong resistance, now in theory strong support.

The index reached 5195 but when traders came back from the sandwich queue, the technical trade kicked in and the index began to drift back up again, confirming 5200 support. Then just before 3pm someone obviously put in a big buy order, focused on the resources sectors, and we rallied into the green to finish the session up 12 points.

The positive close was all about a 1.3% gain for materials and a 1.2% gain for energy, with no other sector standing out. The banks remained stagnant as investors continue to mull over the impact of the government’s near wholesale adoption of the Murray Inquiry.

Red ones go faster

Wall Street’s session began last night as another dreary drift, offering little conviction. Traders had strolled past a line-up of gleaming sports cars and grand tourers outside the NYSE looking as expensive as they are, ensuring the focus of the day was on the partial float of Ferrari for the simple reason that hey, it’s Ferrari, and there was nothing much else to draw attention.

The IPO was well received for the simple reason that hey, it’s Ferrari. Meanwhile General Motors posted a solid result and enjoyed a rally, as did Boeing (Dow).

There were no major data releases on the day, and otherwise the only talking point was a trashing of pharma company Valeant, after one notable fund manager accused the company of being engaged in fraudulent, Enron-style booking of revenues that really aren’t. Another major fund manager and Valeant shareholder responded by buying another 2 million shares at 40% down on the day, and the company itself issued a categorical denial.

It probably didn’t help the accuser’s case that the fund in question is a well known short-side player. Presumably Citron Research wasn’t in buying as the stock rallied back to close the session flat, as that might look a little dodgy.

But while the Valeant story may prove little more than a distraction the healthcare/biotech market is so on edge at the moment, following threats of increased regulation, that the sectors were sold down anyway, taking the Nasdaq down 0.8%. In the last half hour the Dow was dead flat, before late selling led to a 0.3% drop.

As noted, markets tend to go down if there’s no real reason to go up.

Commodities

There has be no announcement forthcoming from China on any new stimulus measures which might have been expected following a run of weak data, but it’s probably the case Beijing is saving up its firepower for next week’s Plenary Session in which the government will outline its latest five-year plan. Any or all of interest rate and RRR cuts, renminbi devaluation and targeted fiscal stimulus is anticipated.

Until that time it seems LME traders can’t find any reason to buy either, so again we see a market going down for lack of any reason to go up. Aluminium, lead and zinc all fell 2-3% last night and nickel and tin fell 0.5%, with copper only slightly lower.

Iron ore fell another US20c to US$51.90/t.

The oils were weaker again, as WTI rolled into a new December delivery front month. Weekly US crude supplies showed a bigger than expected jump and while hopes that a meeting in Vienna between OPEC members and others, such as Russia and Mexico, might lead to production cuts, it seems that’s not going to be the case.

West Texas fell US$1.12 to US$45.17/bbl and Brent fell US86c to US$47.87/bbl.

With Fed rate rise expectations being pushed out in time, gold had rallied towards the 1200 mark on expectations the US dollar would now give up some of its recent gains. But the greenback has failed to come to the party, mostly because it is only one of the major currencies supported by easy monetary policy. The ECB meets tonight and there is much anticipation with regard extended QE.

Traders appear to be losing patience, as gold fell US$9.60 to US$1166.80/oz last night. The US dollar index is up 0.1% at 95.03.

As commodity prices continue to drift lower, so too does the Aussie. It’s down 0.7% at US$0.7211.

Today

The SPI Overnight is down a rather imposing 36 points or 0.7%, which if accurate would once again take the ASX200 down to test support at 5200.

NAB will release a September quarter summary of its business confidence and conditions survey today, while tonight the ECB meets and the US sees existing home sales, house prices and the Chicago Fed national activity index.

On the local stock front, there are quite a few AGMs being held today alongside production reports releases from the likes of South32 ((S32)), while Wesfarmers ((WES)) will report September quarter sales.

Rudi will appear twice on Sky Business today. First at noon (Lunch Money) then again on Switzer TV, between 7-8pm.
 

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article 3 months old

Why China’s Manufacturing Sector Is Not Contracting

By Greg Peel

A Purchasing Managers’ Index (PMI) is a survey conducted within a particular economic sector to determine whether that sector is growing or contracting. There are three main PMIs published each month in Australia, for the manufacturing, services and construction sectors.

Japan, the eurozone and UK all publish manufacturing and services PMIs, as do many other countries, while in the US, each month there are two publications for each PMI, one by the Institute for Supply Management (ISM) which is most closely followed, but also by Markit, which publishes Japan’s and other countries’ PMIs.

In China, there are also two sets of PMIs published each month: one by independent survey conductor Markit (sponsored by Caixin) and one by the Chinese government. China’s PMIs are officially split into manufacturing and “non-manufacturing”, although in the latter case we can substitute “services”.

The two Chinese surveys are not quite “apples to apples” because Caixin’s sample set is more heavily weighted towards small and medium enterprises and away from large state-owned organisations that dominate the government’s official PMI.

A PMI is a “second derivative” measurement. It does not measure growth but the pace of growth. Thus while a PMI index is published in theory on a scale from zero to 100, mathematically zero or 100 are impossible. A measurement of 50 is considered the “neutral” level at which point growth is zero. A number above 50 implies expansion and a number below 50 implies contraction.

While zero and 100 are impossible, numbers above 70 are simply unrealistic and never seen. No industry can grow that fast. On the downside, numbers in the 30s or less are similarly very rare, although we have seen such results for the likes of Greece, for example, in recent years.

For the bigger economies, numbers implying contraction are usually contained to the 40s and expansion to the 50s, although it’s not that unusual to see a brief stint in the low 60s.

PMI releases typically appear from the first business day of the new month (or the first of month, weekend or not, in the Chinese government’s case). More recently, the Caixins and Markits of the world have taken to publishing “flash” estimates of PMI results one week ahead of the end of the month, at which point the month’s trend is becoming clear.

PMIs are considered important indicators because they offer close correlation to actual economic growth, as measured by GDP. And that’s why, particularly in recent years, they have become such potential market movers. We recall that what had been to that point a stock market pullback to August became a full-blown correction later in the month, triggered by a flash manufacturing PMI from Caixin that indicated Chinese contraction.

The Chinese government followed up at the beginning of September with an August manufacturing PMI of 49.7. Confirmation, it seemed, that China’s economy was indeed slowing and that the world should be afraid. Very afraid.

But the world, says Morgans, has got it very wrong.

The world is assuming that like every other PMI measurement on the planet, a 50 reading for Beijing’s manufacturing and services PMIs implies zero growth. Hence 49.7 implies contraction. In fact, the Chinese National Bureau of Statistics has set the neutral point to match the government’s target GDP growth rate. The zero point is therefore based on 7% growth.

Converting that into the PMI scale, Beijing’s August manufacturing PMI reading of 49.7, a number just under 50, implies a growth rate of just under 7.0%, indeed 6.9%. On Monday we learned China’s GDP grew in the September quarter at a rate of 6.9%.

Yes, this is the slowest rate of growth for China since the GFC, but sufficiently consistent with Beijing’s target rate. Where the world is getting it wrong, Morgans implies, is in believing that if the Chinese manufacturing PMI remains under 50 then it is continuing to contract. September’s result was 49.8. But in actual fact it just means the sector is not growing as fast as the target GDP growth rate suggests.

Prior to issuing its Fourth Quarter Investment Strategy, Morgans had not yet seen China’s September GDP numbers. But the analysts have broken down the previous June quarter results.

China’s GDP grew at an annual rate of 7.0% in the quarter. On a segmental basis, the manufacturing sector grew at 6.0%. The service sector grew at 8.5%. Within that sector, finance grew at a solid 19.2%.

Clearly there is a close correlation with China’s manufacturing sector GDP contribution and the manufacturing PMI. There is also a close correlation with monthly industrial production numbers. In August Chinese industrial production grew at an annual rate of 6.1%. Within that particular number, state-owned enterprises saw a slower rate of growth but private sector enterprises grew by 10.3%.

This suggests, Morgans believes, that Beijing is looking to increase productivity by supporting private sector growth ahead of state-owned enterprises. The government is trying to transition the economy away from being export driven to being driven by domestic consumption. This requires an increase in disposable income, Morgans notes. In the June quarter disposable income grew by 9.0%.

“It may be that the recovery in domestic demand and domestic consumption that the Chinese government wants to achieve is just now beginning to occur,” says Morgans.

And it just may be that every time global markets panic over a Chinese PMI result under 50, they are drawing the wrong conclusion.
 

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article 3 months old

The Overnight Report: Drifting

By Greg Peel

The Dow closed down 13 points or 0.1% while the S&P lost 0.1% to 2030 and the Nasdaq fell 0.5%.

Resource Rout

When China’s data came out on Monday the local materials sector fell a percent but the energy sector was little moved. On Monday night oil fell a couple of percent and base metal and iron ore prices fell, so yesterday the local materials sector fell 2.1% and energy 3.3%.

It seems like a delayed reaction. Perhaps traders were satisfied on Monday with China’s GDP result actually coming in better than expected at 6.9%, while ignoring weaker than expected industrial production and fixed asset investment numbers for the month of September.

Yesterday’s 0.6% fall for the ASX200 was all about those two sectors. The offset was telcos, up 2.6%, because for some reason a very unloved Telstra on Monday became the go-to stock yesterday. Perhaps those dumping resources switched into Telstra instead.

The banks are usually the counter-sector for resources, but yesterday they had their own issues. The government’s response to the FSI did not have a huge impact – the financials sector only fell 0.8% -- because there were no surprises on important capital ratios or risk weights. The main issue was a ban on excessive credit card surcharges, but we’ve been down this path before with excessive bank fees and late payment fines and the banks have managed to sail through.

There was some weird trade on the open on the ASX yesterday but we’ll ignore that as being a blip, and thereafter the index just quietly faded away all day. Not a lot of conviction. The minutes of the October RBA meeting would not have provided much excitement either.

The rate that stops the nation

Australia’s June quarter GDP growth was weak, the RBA board members noted at the meeting, but in line with expectations, due to “what appeared to be temporary weakness in resource exports” and a further decline in mining investment. But, and this is the big “but”:

“…there had been further evidence of rebalancing from the resources sector towards non-mining activity. This rebalancing was being increasingly supported by the depreciation of the Australian dollar, which had led to a noticeable increase in net service exports over the past year.”

The RBA also gave a nod to unemployment not being as high at this time as was expected earlier in the year, but otherwise the board could not ignore the ever lurking housing bubble, if that’s what it is. The board suggested that “The key domestic sources of risk to financial stability, and stability of the Australian economy more broadly, revolved around developments in local property markets”. Recent APRA tightening was having an impact, it was acknowledged, but clearly the housing market remains one of the central bank’s primary concerns.

Now, bear in mind that this meeting was held before the September US jobs number release kicked Fed rate rise consensus into 2016, and before Westpac led out with a mortgage rate increase. Both provide just a little more room for the RBA to cut its cash rate again. However that aside, the minutes suggest we can scratch a Cup Day rate cut here and now. The words are in front of us: temporary weakness; evidence of rebalancing; supported by Aussie depreciation; notable increase. And, the RBA is still very worried about the housing bubble – the “key domestic source of risk”.

Scratch December too.

Earnings Mix

Australia’s housing concerns currently revolve around apartments, and US housing starts data released last night showed an overall 6.5% jump in September starts thanks to an 18.3% increase in apartment starts. Starts of houses rose only 0.3%. Whole apartment blocks of course make the numbers lumpy.

Thus while it was the first monthly increase in net starts following two months of decreases, there was no great reason to be excited. The focus thus turned back towards earnings season.

Among the Dow components, “old tech” IBM’s fourteenth consecutive quarter of lower revenue sent its shares down 6%, balanced by beats from aerospace company United Technologies (up 4%) and financial conglomerate Travelers (up 2.5%). Harley Davidson blew a gasket and fell 14%.

“New tech” names like Facebook, Google and Amazon all saw some selling last night as traders decided these had become a bit overblown, sending the Nasdaq lower. The Dow balanced itself out and the S&P netted out a slight decline.

Beyond earnings, there’s not a lot of impetus evident.

Commodities

Nor is there much commitment in commodities markets at present. Sluggish trading on the LME last night saw all of aluminium, copper, lead and zinc a little lower while nickel rose 0.5% and tin jumped 2%.

Many an analyst expects iron ore to slide back below 50 and that’s a story in progress. Last night iron ore slipped another US40c to US$52.10/t.

West Texas fell another US51c to US$45.55/bbl while Brent was as good as unchanged at US$48.73/bbl.

The US dollar played no part, its index is flat at 94.90.

The Aussie is 0.2% higher at US$0.7260.

Today

The SPI Overnight closed down 12 points or 0.2%. It would seem this consolidation phase just above the 5200 break-out level is set to continue.

There is very little in the way of data out over the next 24 hours, locally or globally.

BHP Billiton ((BHP)) will report quarterly production numbers today, along with other iron ore juniors. Amcor ((AMC)), Insurance Australia Group ((IAG)), Medibank Private ((MPL)) and Origin Energy ((ORG)) are among those companies holding AGMs today while Macquarie Atlas Roads ((MQA)) will provide a quarterly update.
 

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(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's - see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Overnight Report: Neither Here Nor There

By Greg Peel

The Dow closed up 14 points or 0.1% while the S&P was flat at 2033 and the Nasdaq rose 0.4%.

Fizzer

Absolute edge of the chair, heart in the mouth, hide behind the sofa stuff. No, I’m not referring to China’s GDP result yesterday. While I waited for that announcement I was watching my recording of the Scotland game, having managed to avoid hearing the result. I was transported back to Lansdowne Road, 1991. Back then we went on to win the cup.

The Chinese GDP result, on the other hand, was so benign one might almost be tempted to believe it was scripted. The government is targeting 7.0%, economists had forecast 6.8% in the September quarter, and the result came in at 6.9%. What does one do with that number?

No one knows, it seems. Yesterday the ASX200 rose 20-odd points from the open, as the futures had suggested, before meandering aimlessly through to lunchtime and Beijing’s announcement. When the result was known, the index similarly meandered aimlessly through to the close.

Sector results were mixed, and the only notable moves were a 1.1% fall for materials, for which a lower iron ore price had already provided impetus, and a 2.4% fall for telcos. Suddenly Telstra is looking very unloved.

The 6.9% number is probably the Goldilocks result. It’s not bad enough to send markets into a tailspin but not good enough to prevent Beijing from implementing further stimulus measures. Meanwhile, the accompanying data for the month of September was also mixed.

Chinese retail sales grew 10.9% year on year in September, up from 10.8% in August, beating forecasts of 10.8%. Industrial production grew 5.7%, down from 6.1%, and missing 6.0% forecasts. Fixed asset investment grew 10.3% year to date, down from 10.9%, missing forecasts of 10.8%.

Beijing is attempting to transition the Chinese economy away from reliance on heavy industry production and towards domestic consumption. While the above production and investment numbers are disappointing, the better sales result suggests things are at least moving in the right direction. But of course the likes of BHP are not going to be ecstatic to learn the Chinese are buying more iPhones.

With the results providing no great incentive to buy or sell, we’ll now just have to wait to see what Beijing’s response will be. The numbers similarly sent European and US markets into a torpor last night. And this morning the local index futures have closed unchanged.

Commodities

To find any notable response to the Chinese data we have to go to the commodities markets. Here the response was negative, although not dramatically so. If we suggest that the GDP result was better than expected, then the monthly industrial production and fixed asset investment numbers were likely the cause of commodity market angst.

On the LME, all base metal prices fell roughly one to one and a half percent.

Iron ore fell US10c to US$52.50/t.

West Texas crude fell US$1.16 to US$46.06/bbl and Brent fell US1.69 to US$48.75/bbl. While these are reasonable falls, they only take prices back to the lower end of the ranges they have been trading in for some months now. Indeed, it’s amazing how much our local energy index has been flying around of late when WTI has not broken 45-50 since July.

The US dollar index is up 0.3% at 94.95, which also would not have helped commodities. Gold is down US$6.30 to US$1170.00/oz.

The Aussie initially shot up on what was a forecast-beating Chinese GDP, but fell thereafter and is 0.5% lower at US$0.7246 over 24 hours.

Stagnant

Commodity prices falls had their impact on Wall Street last night, but the major indices balanced out for an overall flat result.

On the earnings front, Morgan Stanley posted the biggest miss of all the major banks and its shares dropped 5%.

On the data front, the US housing sentiment index rose to 64 from 61 in August to mark its highest level in ten years. While Wall Street is encouraged by the news, it is also somewhat perplexed. Housing starts are still growing steadily but at much slower pace now than they were two years ago. Why the jubilation?

While there are plenty of data releases yet to follow this week, the data-watching game has rather now lost its excitement given expectations of a Fed rate rise have waned. It would probably require a huge surge in October jobs to spark up interest once more.

That leaves US earnings results to watch, and there are plenty more of those to come in the next couple of weeks.

Today

As noted, the SPI Overnight is unchanged.

The minutes of the October RBA meeting will be released today. We’ve nevertheless had two significant developments since that meeting was held. Firstly, a second consecutive US jobs shocker took a 2015 Fed rate rise off the table for most. Secondly, Westpac has increased its mortgage rates and the other banks are expected soon to follow. Both developments shift the dial more towards the possibility of an RBA rate cut.

On the subject of banks, this morning the Turnbull government will issue its official response to last year’s Financial Systems Inquiry. News services are a-buzz this morning, breathlessly reporting that Turnbull is “going after the big banks” and warning viewers they may have to pay more for their mortgages.

The reality is, of course, that the banks have already largely adjusted for what the FSI recommended, through capital raisings, risk weight adjustments and mortgage repricing. Tightened APRA regulations have also pre-empted likely new rules. So unless the government decides to legislate to a degree far more onerous than David Murray has recommended, there should be no real surprises.

Cochlear ((COH)) will hold an AGM today. Newcrest Mining ((NCM)) and Oil Search ((OSH)) will post quarterly production reports.
 

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(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's - see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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article 3 months old

The Monday Report

By Greg Peel

Poised

The ASX200 shot up on Friday morning on the opening rotation, peaking at 10.30am when that process is completed. A solid rally on Wall Street, driven largely by general acceptance that the Fed will not be raising this year, provided the impetus as the index rose 64 points.

But that was the top for the day, and in true Friday style the index spent the rest of the session drifting back to a less dramatic rise of 38 points. Looming large in investors’ minds heading into the weekend was today’s release of China September quarter GDP, and also the possibility Beijing may pre-empt with a monetary policy announcement this weekend ahead of that release, given last week’s weak data, particularly the inflation result.

No announcement has been forthcoming, so we await the midday release of the number economist consensus has at 6.8%.

There was nothing particularly remarkable about Friday’s trade on Bridge Street. The banks provided most of the upside on a cap basis with a 1.1% gain, with utilities and consumer discretionary backing up. It was an up-day for energy but materials proved the only laggard, closing slightly weaker on another fall in the iron ore price.

The RBA released its six-monthly Financial Stability Review on Friday, which also proved unremarkable. The central bank remains concerned over property markets – seeing risks growing in commercial lending but noting that macro-prudential controls are having their intended effect on housing – and noting that Australia’s banks are facing “heightened, but manageable risk” in a number of sectors.

Confused

The most oft heard word on Wall Street at present is “confused”, with Credit Suisse even putting out a research note suggesting investors are presently more confused than they’ve ever been.

The greatest source of confusion is of course the Fed, and here we find Janet Yellen still beating the 2015 rate rise drum, the rest of the Fedheads offering diametrically opposed opinions, and the market now shifting its highest probability to March next year from January previously. The other issue is China, where monetary policy is also a source of confusion. Will Beijing pull another renminbi devaluation rabbit out of the hat?

Once upon a time stock markets traded on fundamentals. Wall Street closed the week on a positive note on Friday, with the Dow rising 74 points or 0.4%, the S&P up 0.5% to 2033 and the Nasdaq up 0.3%. It was the third straight week of net gains.

None of which has much to do with fundamentals, it would seem, given US economic data have been weak and US corporate earnings reports have not set the world on fire either. There was good news on the data front on Friday, with Michigan Uni’s fortnightly measure of consumer sentiment rising to 92.1 from 87.2 previously, but September industrial production fell 0.2%, as expected. General Electric (Dow) posted an earnings beat which saw its shares rise 3.4%, but the three sector leaders for the week of gains were utilities, healthcare and telecoms. Therein lies the tale – no rate rise.

It was also the quietest week on Wall Street in volatility terms since July. One would be forgiven for not realising there is an earnings season in progress.

Commodities

It was another mixed and largely uneventful night on the LME on Friday night ahead of today’s major Chinese data releases. Copper and zinc fell 1%, lead rose 1% and the others did not much bother the scorer.

Iron ore fell US60c to US$52.60/t to be down 5.2% for the week.

The oils were also down around 5% for the week. Friday night nevertheless saw West Texas rise US36c to US$47.22/bbl and Brent rise US71c to US$50.44/bbl. OPEC announced it would hold a “technical meeting” next week, ahead of its scheduled December meeting where production quotas are typically set. This gave oil markets some hope maybe production cuts are back on the cards, despite OPEC spokespeople strongly suggesting otherwise.

Gold fell US$6.60 to US$1176.30/oz as the US dollar index rose 0.3% to 94.71. Despite last week being the week in which Wall Street decided there would be no 2015 rate rise, the dollar is back where it was when the week began. The balance is largely the euro, given the ECB has been hinting at extended QE and holds a policy meeting this week.

The Aussie dropped 0.7% to Saturday morning, to US$0.7279, probably as traders square up ahead of the Chinese data.

The SPI Overnight closed up 22 points or 0.4%.

The Week Ahead

Beijing will release China’s September quarter GDP number today along with month of September industrial production, retail sales and fixed asset investment numbers. On Friday Caixin will release a flash estimate of October manufacturing PMI.

As we are not trading in fundamentals, the response to China’s GDP will be interesting. Were the result to match or beat Beijing’s 2015 target of 7.0%, the market may start to doubt baked-in expectations of further stimulus being forthcoming at any moment. That would be potentially negative.

Were the result to match consensus expectations of 6.8%, the popular media will have paroxysms and the headlines will scream Weakest Chinese Growth Since The Boxer Revolution or some such, but the response may actually be positive on the same bad-news-is-good-news basis.

Beyond China, the US will see housing sentiment tonight, housing starts tomorrow, house prices on Thursday, along with existing home sales, the Chicago national activity index and the Conference Board leading index, and a flash manufacturing PMI on Friday.

Japan and the eurozone will also flash on Friday.

The ECB will hold a policy meeting on Thursday night. With a 2015 Fed rate rise off the table, at least as far as the market is concerned, will Mario Draghi see extended QE as more pressing?

And ditto, will the RBA now see greater reason to consider a Cup Day rate cut? The minutes of the October meeting are out tomorrow, but that meeting was held before Westpac announced increased mortgage rates that led the market to assume (a) the other banks will quickly follow and (b) this opens the door further for a rate cut, given the impact on the housing market.

The only other local data release of note this week is NAB’s September quarter summary of business confidence.

It’s a busy week on the local stock front nonetheless.

The AGM floodgates begin to open this week, with highlights including Cochlear ((COH)) tomorrow, Amcor ((AMC)), Insurance Australia Group ((IAG)) and Medibank Private ((MPL)) and Origin Energy ((ORG)) on Wednesday and Qantas ((QAN)) on Friday, just to name a few.

On top of the AGMs we have ongoing quarterly production reports, and this week sees Newcrest Mining ((NCM)) and Oil Search ((OSH)) tomorrow, BHP Billiton ((BHP)) on Wednesday, South32 ((S32)) on Thursday and Santos ((STO)) and OZ Minerals ((OZL)) on Friday.

But wait, there’s more. Wesfarmers ((WES)) will release its quarterly sales numbers on Thursday and ResMed ((RMD)) quarterly earnings on Friday.

Could be an eventful week.

Rudi will appear on Sky Business on Thursday at noon and again between 7-8pm for the Switzer Report.
 

For further global economic release dates and local company events please refer to the FNArena Calendar.

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article 3 months old

Next Week At A Glance

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

Beijing will post China’s September quarter GDP on Monday. Given the recent run of data, one can assume the government’s targeted annual rate of 7.0% will be difficult to achieve. But if it is a number in the sixes no one should be surprised, and such a result would provide for further expectation of more monetary/fiscal stimulus.

That is if Beijing doesn’t announce any stimulus measures, such as an interest rate or RRR cut, this weekend. Anticipation is high following this week’s dour trade and inflation data.

There may be some disappointment if Beijing doesn’t announce new stimulus this weekend, but as to whether there is much downside left in the China story is another matter. Meanwhile, last night’s trade on Wall Street indicated US investors may now be back in bullish mode given waning expectation of a 2015 rate hike. Recent data certainly do not support such a move.

Tonight sees industrial production and consumer sentiment numbers in the US, while next week brings housing sentiment, starts and prices and existing home sales, The Chicago Fed national activity index and Conference Board leading indicators.

On Friday the US will see a flash estimate of the October manufacturing PMI, as will the eurozone, Japan and, importantly, China, courtesy of Caixin. But Monday sees not only China’s GDP but also monthly retail sales, industrial production and fixed asset investment numbers, so the China factor will be well in place by then.

The ECB will hold a policy meeting on Thursday. Extended QE has been much hinted at.

In a quiet economic week for Australia, Tuesday’s release of the latest RBA minutes is the highlight.

The local stock market will be a lot busier, nonetheless. The AGM season is ramping up in earnest, coinciding with resource sector quarterly reports. AGM highlights include Cochlear ((COH)), Amcor ((AMC)) and Qantas ((QAN)), while production reports from Newcrest Mining ((NCM)), Oil Search ((OSH)), BHP Billiton ((BHP)) and Santos ((STO)) will provide some excitement.

Wesfarmers ((WES)) will also report quarterly sales.
 

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article 3 months old

The Overnight Report: US Gloom Descends

By Greg Peel

The Dow closed down 157 points or 0.9% (to below 17,000) while the S&P lost 0.5% to 1994 and the Nasdaq fell 0.3%.

Beijing phone home

Australia’s energy sector has become particularly fickle of late, flying around on the slightest moves in overnight energy prices. The rally in WTI crude back to almost US$50/bbl last week had the big oil names on the fly as bargain hunters piled in, but this week hopes of a break to the upside for oil prices have evaporated.

Crude oil prices were weaker on Tuesday night so yesterday those big oil names were hammered, sending the energy sector down 3.3%. But this move proved to be very much a standout among the sectors.

The ASX200 fell around 40 points from the open yesterday and despite a couple of blips, was still around that level when Beijing released China’s September inflation data.

China’s headline CPI fell to an annual rate of 1.6% in the month, down from 2.0% in August. The PPI was down 5.9%, unchanged from the August annual rate, to mark the 43rd consecutive negative number and maintain a six-year low.

Of course in this upside-down economic world, this is good news. It is now assumed Beijing will be jolted into acting, and acting swiftly, with further monetary policy stimulus, most likely in the form of interest rate and/or reserve ratio requirement (RRR) cuts.

To that end, the ASX200 recovered through the afternoon to be down only 5 points at the close. Energy remained hammered, but materials fell only 0.4%, while consumer discretionary (+0.9%) and healthcare (+0.8%) provided a balance.

The banks were also very much in the spotlight following Westpac’s ((WBC)) announced capital raising and increase in floating mortgage rates. Westpac shares remained in a trading halt, thus were not factored into yesterday’s 0.2% gain for the financial sector. The points to note about Westpac’s announcements are firstly that the bank is the last of the Big Four to raise new capital, thus there is no further sector implication to consider, and secondly that Westpac’s rate hike will probably prompt its peers into following suit.

RBA?

Analysts were surprised when Westpac didn’t join in the capital raising rush last quarter when ANZ Bank and Commonwealth Bank announced in quick succession, with National Bank having raised previously. Perhaps the volatility at the time, which saw bank shares carted, encouraged the board to delay.

The potentially good news for the wider Australian economy is that in lifting mortgage rates, and assuming all will follow, the banks have relieved the RBA, to some extent, of the need to carefully balance monetary policy for the wider economy against the rampant Sydney-Melbourne housing boom. Across the board 20 basis point mortgage rate hikes leaves the door a lot more open for the central bank to deliver a 25 basis point cash rate cut, perhaps on its oft favoured date of Cup Day.

The housing boom is already showing signs of having topped out, particularly in the apartment segment, following stricter APRA regulations and supply rising ahead of population growth. Mortgage rate increase will go further towards taking the heat out.

Possibly hindering a decision by the RBA to rush into another rate cut, despite the drag of lower commodity prices, is the fact the Aussie has finally come down to a more realistic level, and the impact of that is yet to really be seen in the Australian economy. However, the news coming out of the US last night may offer the RBA sufficient grounds to take the cash rate down to a new historic low.

Retail Rout

US retails sales rose just 0.1% in September, it was revealed last night, following a flat August result. While meeting expectations, the number nevertheless remains disappointing. Take out the balance of strong auto sales and lower fuel prices, and sales were actually flat.

The fall in gasoline prices over the month saw the US PPI fall 0.5%, again in line with expectations. The core PPI, ex food & energy, fell 0.3%.

Just as Wall Street was absorbing these rather dour data, America’s biggest bricks & mortar retailer and employer, Wal-Mart, issued a profit warning which suggested earnings would be flat for the next three years. The company’s decision earlier in the year to raise wages for its enormous employee pool is the issue, along with impacts from the stronger US dollar.

Wal-Mart shares were subsequently slammed 10%, which is why the fall in the Dow last night was much greater than that of the S&P500. However, the Wal-Mart news sparked selling across all US bricks & mortar names, most likely because of selling in the leading related exchange traded fund.

If the above wasn’t enough to ensure a soggy session on Wall Street last night, later in the day the Fed Beige Book was released. The anecdotal assessment noted apparent slowing in three of the twelve Fed districts, with the remaining nine posting only “modest” or “moderate” growth. The report specifically pointed to the impact of the stronger US dollar as being behind this weaker assessment.

All up, last night’s economic news suggests the US economy is not going to grow as strongly in 2015 as had been hoped earlier in the year, particularly after the strong June quarter rebound from the weather-bound March quarter. The US economy is consumer-led, and consumers are not coming to the party.

Fed rate rise in 2015? Forget it. At least, that’s what most commentators are now suggesting, while the Fed itself is appearing to be more and more fractured in its views, frustrating Wall Street and adding to uncertainty. This would explain why last night’s bad news was indeed taken as bad news, when otherwise further confirmation of a 2015 rate rise being off the table could be seen as bullish for the stock market.

The US bond market certainly doesn’t expect a rate rise. Last night the ten-year yield fell 7 basis points to 1.98%. And that US dollar that has been causing all the trouble took a beating last night, with the dollar index falling 0.8% to 93.97.

Commodities

The weaker greenback and heightened expectations of further Chinese stimulus were enough to spark some buying of base metals last night. Tin lead the charge with a 2.6% gain while copper and lead rose 1%, with the others posting smaller gains.

Iron ore nevertheless fell US60c to US$54.30/t.

The oils were almost unchanged last night, which we haven’t seen for a while, no doubt balancing underlying weakness against the impact of the lower US dollar. West Texas is at US46.63/bbl and Brent is at US$49.15/bbl.

The big winner on the night was gold which, on the dollar crunch, rose US$19.00 to US$1187.00/oz.

The loser, we might say in a reverse sense, was the Aussie, which having fallen sharply after the release of the weak Chinese trade data earlier this week has jumped 0.7% to US$7303.

If the US dollar is now set to lose its rate rise expectation premium and force the Aussie higher, the chances of a November RBA cut improve.

Today

On the balance of everything, the SPI Overnight closed down only one point.

It’s jobs day in Australia today, while tonight the US CPI will provide further fuel for the Fed speculation fire.

It’s a busy day on the local stock front today featuring several AGMs, including that of CSL ((CSL)), along with a raft of resource sector production reports. Fortescue Metals ((FMG)), Iluka Resources ((ILU)) and Woodside Petroleum ((WPL)) provide the highlights.

Rudi will make his weekly appearance on Sky Business. Tune in midday-1pm for Lunch Money.
 

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article 3 months old

The Overnight Report: Marking Time

By Greg Peel

The Dow closed down 49 points or 0.3% while the S&P lost 0.7% as the Nasdaq fell 0.9%.

China Factor

At the beginning of the month we saw Chinese PMI numbers that were inconclusive. The market hung on to a reduction in the pace of manufacturing contraction according to the official data, preferring to ignore the independent Caixin result of accelerated contraction, and ignore reduced expansion in the now larger Chinese service sector.

Yesterday’s Chinese trade numbers can be similarly assessed with either a glass half full or empty approach. Exports fell year on year by 3.7% in September and imports fell 20.4%. Those numbers look bad in anyone’s book. But the export number is an improvement from the 5.5% yoy decrease marked in August, and is not as bad as was forecast. Hence, we might say that’s an encouraging result.

Imports, nevertheless, fell 13.8% in August so 20.4% looks rather alarming for an economy attempting to transition to domestic consumption-based.

How did Bridge Street respond?

Well the resource sectors took us down from the bell, responding to lower oil prices in particular, but ahead of the Chinese numbers the ASX200 was only down around 12 points. The sellers piled in once the numbers were known just prior to midday and by around 2pm the index was down 60 points. Clearly the Chinese numbers were a concern. But from there we rallied back to halve that loss, down only 30 points at the close.

If the resource sectors were weak to begin with, then these trade numbers were never going to help. Energy closed down 2.8% on the session and materials 2.0%. Next worst was consumer discretionary with 1.0%, where sales to China are a factor. But domestic-oriented sectors such as consumer staples and healthcare finished higher on the day, and a 0.7% rise for industrials was very healthy against a backdrop of yet another resource sector plunge. The banks were only down 0.4%, so there was no “Sell Australia” going on.

At least not in the stock market. The Aussie is this morning over a cent lower at US$0.7252 despite the US dollar index dipping 0.1% to 94.74. The short-covering rebound in the currency has clearly now run its course.

The domestic economic news of the day centred around NAB’s monthly business survey. There were no surprises when the September confidence measure jumped to plus 5 from plus 1 in August given Turnbull had seized the reins two weeks prior to the survey. However it must be noted that August was a month dominated by a plunging Chinese stock market and much subsequent wailing and gnashing of teeth, so we would expect an easing in that arena to have provided for some return to confidence.

Conditions remained unchanged at an elevated plus 9, reflecting solid local employment and profitability measures, ANZ’s economists suggest.

We also had RBA deputy governor Philip Lowe suggesting yesterday business conditions appear to be okay and firms are willing to hire, but as to whether this would convert into a much needed boost in non-mining capex to offset the resource sector decline he was not so sure.

There is also a lot of talk coming from stock analysts and from the central bank that the local housing boom may now have peaked, and to date it’s really only been housing that has provided the offset against the impact of low commodity prices on the Australian economy. It’s time now to see the lagged flow-through of the much lower currency start to make an impact on the numbers in other industries. We may recall that a decade or so ago, tourism, for example, was Australia’s second biggest contributor to GDP.

Mixed

Leading US bank and Dow component JP Morgan had always reported its earnings at the opening bell, but of this reporting season has now decided to do so after the closing bell. With Intel (Dow) an aftermarket reporter as well last night, Wall Street was set for another meandering session of quiet trade until these important results were known.

Wall Street did see the numbers from Johnson & Johnson (Dow), which came out as a mixed bag of earnings beat, revenue miss and guidance beat. But beat or not, J&J’s earnings were down sharply year on year thanks to what the company measured as a 16% currency impact, that being the strong US dollar. J&J shares closed down 0.6%, but in a market that had already opened weaker on the Chinese trade data.

After the bell, Intel beat on both earnings and revenues but traders did not like the report otherwise and Intel shares are down 2% in the aftermarket. Rail freight company CSX, a major coal hauler a la Aurizon/Asciano, also beat top and bottom and its shares are up 1%, but only after having fallen 2% in the session on the China numbers. CSX also posted a fairly dim outlook for coal, but no surprises there.

Forecasts for JP Morgan’s result had been so knocked down ahead of the result traders were prepared to back an easy beat, but alas the leading bank posted a miss on both the top and bottom lines. JPM shares are down 1.2% in the aftermarket.

All things being equal these results do not bode well for a positive start on Wall Street tonight, albeit one session’s results do not an earnings season make. Traders are holding out for at least a full week of numbers which feature more big banks and other significant Dow names before beginning to draw any conclusions.

Commodities

Responses in commodity markets to the China data were predictable. On the LME, only aluminium was little changed as all other metals fell around 1-1.5%.

Iron ore fell US80c to US$54.90/t.

After Monday night’s OPEC disappointment, the oils were once again weaker. West Texas fell US79c to US$46.75//bbl and Brent fell US$1.05 to US$49.17/bbl.

As noted, the US dollar was steady, but gold rose US$5.50 to US$1168.00/oz.

Today

The SPI Overnight closed down 30 points or 0.6% which would put us back at yesterday’s post-China low.

Today Beijing will report September inflation numbers.

Westpac will follow up locally today with its monthly consumer confidence report.

September retail sales numbers will be closely watched in the US tonight as the earnings results flow in, including those of Bank of America.
 

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article 3 months old

The Overnight Report: Looking For The New World

By Greg Peel

The Dow closed up 47 points or 0.3% while the S&P gained 0.1% to 2017 and the Nasdaq added 0.2%.

Oiled Out

We recall that over a week ago, the head of OPEC suggested two things. Firstly, that he expected the oil market to return to balance in 2016 as rising global demand met falling non-OPEC supply, specifically reduced US shale production. Secondly, that he was prepared to discuss the state of the oil market with the US.

The latter comment sparked hopes OPEC may finally be prepared to look at production cuts, perhaps having expected that by now, oil prices may have recovered above levels that have left most OPEC producers, including Saudi Arabia, underwater on their fiscal obligations. But this is not to be the case. Speaking on Sunday at a conference in Kuwait City, El-Badri reiterated his expectation of a rebalance in 2016 but made no mention of any production cuts.

It was left to the Kuwaiti oil minister to suggest at the conference that leaving OPEC’s output target at 30mbpd was the “ideal solution” to rebalance the market and support prices.

We had to wait until last night to see oil prices respond, and they fell 4%. Having made a couple of attempts to close over the US$50/bbl mark, WTI has now slipped back to the 47s once more. Australian investors did not wait yesterday to see what oil prices would do last night. They sold the energy sector down 2.3% in yesterday’s session.

It was the perfect trigger for a day of profit-taking across the board following five days of rally which had taken the ASX200 from a new post-correction low to a breach of the previous trading range to the upside. While energy led the charge, all sectors were sold off for no other particular reason. While materials suffered the least with only a 0.4% fall, it’s not often we see the materials sector trading lower when iron ore has a good gain and base metals put in a flyer, including zinc up 10%.

Both energy and materials have seen very solid gains in this recent rebound having been the most beaten down on China fears. But yesterday also some of the recent small cap high-flyers copping solid profit-taking hits for no other reason as well.

All up it is exactly what one might expect given the performance of the past week – a bit of consolidation following a solid bounce off the low. We also have China trade data out today, and squaring up ahead of what recently have been some market-crunching data releases out of Beijing makes a lot of sense.

We also have US September quarter earnings season beginning in earnest tonight, with all eyes on the likes of Dow stocks JP Morgan and Intel.

Earnings Angst

Consensus forecast for S&P500 net earnings in the September quarter is for a 5.3% year on year decline. If this forecast rings true, it would be the first negative quarter of earnings for the US market since the GFC rebound began.

Which begs the question, why has Wall Street rallied for seven consecutive sessions ahead of what is expected to be the worst earnings season in several years?

Well firstly, while Wall Street has rallied it has rallied back from a solid fall on the China story, boosted by a shift in expectations that there will not indeed be a Fed rate rise this year, to regain about half of what had been lost. The weak earnings forecast has a lot to do with expectations of lower revenues offshore due to both a stronger US dollar and weaker demand in the likes of China in particular. So we might suggest a reduction in earnings is priced in.

Secondly, ahead of both the March and June quarter earnings seasons, consensus was also for reduction in net S&P500 earnings. In both cases net earnings surprised to the upside to produce basically flat results. Are we about to see the same story play out a third time? The only difference this time, it has been noted, is that in the previous two quarters, net forecasts had been revised up slightly to be less negative just ahead of the results season. That has not happened this time.

Last night was Columbus Day in the US for which banks and the bond market were closed. Stock markets were open but the Dow posted its least volatile session since the China-based turmoil began back in July. Volumes were thin, and all is in readiness for a barrage of earnings reports beginning tonight.

While the energy sector was weak on the day, the usual impact the oil price has on the wider US market was not evident.

Commodities

West Texas is down US$2.06 or 4% at US$47.44/bbl and Brent is down US$2.22 or 4% at US$50.22/bbl.

After very solid gains posted on Friday night thanks to Glencore’s announced production cuts, base metal markets also took a breather last night. Given it’s LME week this week trading can often be thin with most of the market in conferences or at the bar.

Lead still managed to rise another 1% having risen 6% on Friday night, following the Glencore announcement. Zinc only came back 0.6% after jumping 10%. Copper is steady, aluminium down 1%, and the others posted slight dips.

Iron ore rose US20c to US$55.70/t.

The US dollar index is steady at 94.84 and gold has ticked a little higher to US$1162.50/oz.

The short-covering rally in the Aussie dollar has continued despite the easing back in commodity prices and a steady greenback. The Aussie is 0.4% higher at US$0.7359.

Today

The SPI Overnight closed down 16 points or 0.3%. It will be interesting to see if the energy sector goes on with it today, selling once more on confirmation of a drop in oil prices.

RBA deputy governor Philip Lowe will make a speech today and he often has something to say that catches the attention of forex markets. NAB will release its September business confidence and conditions survey, covering the first full month of the new Turnbull government.

Beijing will release Chinese September trade data around midday today. The last round of PMIs were a little more promising, if not mixed, and with China having been shut down for a week, markets have had nothing to be particularly scared about. So today’s data will be interesting.

Tonight in Europe sees the release of the ZEW investor sentiment survey for the eurozone, which will be the first measure since the VW scandal hit its heights.

Telstra ((TLS)) will hold its AGM today and Energy Resources of Australia ((ERA)) will release its quarterly production report.
 

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article 3 months old

The Monday Report

By Greg Peel

Bottom?

It was just over a week ago that the ASX200 closed at a new low for the correction from 6000, at 4918. The close “took out” the previous intraday low of 4928 after having breached what had been solid support at 5000. Technically, were the index to bounce from that level we could start to believe perhaps the bottom had been seen.

And it did, back over 5000. It briefly consolidated and then commenced a five-day rally. On Thursday the ASX200 closed above solid resistance at the top of the recent range at 5200. Technically this was another green light. On Friday we rallied again, to close above 5300.

All very positive, but of course nothing is certain in financial markets. Looking at Friday’s sector moves it is nevertheless clear the rally from the bottom is being driven by commodities.

When rumours emerged last week that heavily indebted global resource giant Glencore was potentially about to go under, Lehman-style, we saw capitulation selling in local mining names that took the likes of BHP down to prices long forgotten. Glencore dismissed the suggestion, and sparked a rebound in resource sector stocks. At the same time, commodity analysts have for a while now been suggesting that prices may have fallen about as low as they can go in this cycle. Already there have been big moves afoot to cut production and trim back mining and drilling activity.

In other words, China may yet disappoint further and the prices of some commodities may yet slip lower but in reality, there is unlikely to be a lot of downside left if mining companies continue to pursue a supply-side response. If there are to be casualties yet to come, they will be at the smaller end of the spectrum, and may well be consolidated through M&A rather than left to perish. Bigger companies in tenable financial positions should survive without issue, to eventually benefit from such curtailment and consolidation activity.

On Friday the local materials and energy sectors led the 1.3% index rally with 2.3% gains each. It was a long way back to banks and consumer staples with 1.2%. The big resource sector names have now rebounded very substantially from their Glencore-related bottoms. And on Friday night Glencore set metals markets on fire.

Commodities

Last night metal producers and traders converged on London for LME Week, hosted annually by the London Metals Exchange. In what has been considered a shrewd move ahead of the gathering, Glencore announced on Friday night it is responding to weak conditions to cut 100,000tpa of lead production and 500,000tpa of zinc production. The announcement is expected to promote further talk of supply curtailment over cocktails in London, and generally revive some enthusiasm in the industry.

In response, lead jumped 6.3% on the LME on Friday night. Zinc jumped over 10%, its biggest session move in decades. Meanwhile, as expectations of a Fed rate hike in 2015 continue to fade, the US dollar index dropped 0.5% to 94.87, further supporting commodity prices.

On anticipation Glencore’s announcement will not be the last we’ll hear across the metals spectrum, aluminium and copper jumped 3% on Friday night and nickel 4%. Tin, up 1%, proved the laggard, but tin had already rallied strongly last week on news of an Indonesian ban on tin exports.

The news came as markets absorbed what had been a disappointing earnings result from Alcoa, announced after-market on Thursday night, but Alcoa is also planning to break up its business and sell-off a chunk, which is all part of the consolidation process going on in the sector. While Alcoa is considered first cab off the rank for each US quarterly earnings season, it is no longer looked to as a bellwether for the season.

The weaker greenback again encouraged West Texas crude to trade over the US$50 mark on Friday night, but again it fell back by the end of the day, to close up US13c at US$49.50/bbl. At present, talk of oil having seen the bottom is also bubbling, and the greenback is supportive, but geopolitical considerations are also playing a part as tensions heighten over Syria.

There seems to be some work yet to do to break through US$50. Brent rose US80c to US$52.44/bbl.

Iron ore rose US70c to US$55.50/t.

Gold used to be the safe haven to run to whenever geopolitical tensions emerged, but not so much these past few years. A weaker US dollar is nevertheless supportive, hence gold jumped US$17.80 on Friday night to US$1157.70/oz.

Is the Aussie a commodity currency? On Saturday morning the Aussie was up a cent at US$0.7327 and is hanging in there so far this morning.

Wall Street

Unsurprisingly, the US materials sector led Wall Street higher on Friday night, with energy in tow. In the wider market it was a more sluggish session nonetheless, suggesting that while the rally marked its sixth day, things were beginning to look a little tired. The Dow closed up 33 points or 0.2% and the S&P managed just under a 0.1% gain to 2014 to notch up its best weekly performance of 2015. The Nasdaq rose 0.4%.

Atlanta Fed president Dennis Lockhart was still beating the 2015 rate rise drum on Friday night, insisting that December was still a possibility and October could not be ruled out either. But it’s starting to look like the Fed is simply trying to keep up appearances. No one believes an October rate rise is going to happen. The market is now favouring March over December.

Thus it is unlikely Lockhart’s hawkish spin had much of an impact on trading on Friday. With earnings season beginning in earnest this week, traders squared up after a week of solid gains. With Fed speculation now shifting to the background for the time being, the next month in the US will be all about earnings.

The Week Ahead

Of particular interest will be reports from the big US banks, which hit the wires this week, along with a raft of other Dow names.

Meanwhile, the SPI Overnight was down 18 points or 0.4% on Saturday morning, which seems out of line with the big rally in metals. Perhaps traders have decided the big rally in metals simply provides confirmation of the rallies on resource stocks all week long.

The mood might change, nevertheless, when the market realises that China was only on a one-week break and is now back to scare everyone to death. China releases trade data tomorrow and inflation data on Wednesday.

Tonight is Columbus Day in the US, which is a convoluted holiday that sees US banks and the bond market closed but commodity and stock markets open, but likely thin in volume.

Wall Street may have shifted its focus away from an immediate Fed rate hike but the data upon which the central bank is dependent continues to roll in. Wednesday sees retail sales, inventories, the PPI and the Fed Beige Book. Thursday it’s the CPI and both the Empire State and Philly Fed activity indices. Friday it’s industrial production and fortnightly consumer sentiment.

The eurozone will see the influential ZEW investor sentiment index out tomorrow night – the first since the VW scandal. Friday night sees eurozone trade and inflation data which will be closely watched as expectations of a second wave of ECB QE gather steam.

Japan is closed today.

In Australia, tomorrow brings the monthly NAB business confidence survey and Wednesday the Westpac consumer equivalent. The September jobs numbers are belatedly due on Thursday. The RBA’s deputy governor will speak tomorrow and on Friday the RBA will publish a Financial Stability Review.

On the local stock front, this week sees a step-up in the number of AGM’s and resource sector quarterly production reports. In the former camp, Telstra ((TLS)) tomorrow and CSL ((CSL)) on Wednesday offer highlights. In the latter camp, Fortescue Metals ((FMG)) and Woodside Petroleum ((WPL)) on Thursday and Rio Tinto ((RIO)) on Friday are the big names.

Rudi will appear on Sky Business on Thursday at noon.
 

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