Tag Archives: The Week Ahead

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

There are still plenty of reports to get through over the last three days of the month and thus the local earnings season, but nothing like the volume we’ve seen in the latter part of this week. Life returns to normal with September.

Then we can all get some sleep.

We need to keep an eye on dividends from here nevertheless. We’ve already seen many a stock go ex as earnings season has progressed but the pace picks up a bit next week and continues into September, acting as a natural drag on the index.

As to whether the world will look different next week or not will come down to Janet Yellen’s speech at Jackson Hole tonight. My tip is no change. Wall Street will have time to ponder any ramifications over the Labor Day long weekend. US markets are closed on Monday night.

Then it’s jobs week. US non-farm payrolls are out next Friday following private sector numbers on Wednesday.  Data across the week include personal income & spending, house prices, pending home sales, consumer confidence, construction spending and chain store and vehicle sales.

Thursday is the first of the month so that means manufacturing PMIs from across the globe and both manufacturing and the service sector PMI from Beijing.

Australian data next week include the manufacturing PMI as well as building approvals, private sector credit and retail sales.

On Friday, pending changes will be announced to S&P/ASX index components ahead of becoming effective two weeks hence.


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article 3 months old

The Monday Report

By Greg Peel

More of the Same

Behind the scenes of Friday’s modest gain for the ASX200 we saw the same alpha impact of winners and losers among stocks posting earnings results which to a great extent cancelled each other out. The bulk of the ultimate gain was provided by materials (+1.2%), telcos (+1.1%) and utilities (+1.8%), the latter featuring a solid report from DUET Group ((DUE)).

For materials, a significant influence is BHP Billiton ((BHP)) which continues to see buying post-result on the belief the worst is now behind the company, Samarco notwithstanding. Buying in the yield stocks also likely reflects an assumption the Fed will not be raising in September.

Among other reporters, sector heavyweight Woodside Petroleum ((WPL)) rose over 1% following its result while Santos ((STO)) went the other way in falling 2% and Origin Energy ((ORG)) saw ongoing selling, leading energy to a net -0.6% to post the only sector fall of the session.

Standout winners elsewhere included Cleanaway Waste Management ((CWY)) and Tassal Group ((TGR)) while among the losers were Medibank Private ((MPL)) and Mantra Group ((MTR)).

It was another relatively quiet session on Wall Street on Friday night and with the index futures showing down 6 points this morning, we’re no doubt in for another day of sole focus on company reports.

We are now three weeks into the August reporting season with one and a half weeks to go. Yet to date only a third of the companies covered by brokers on the FNArena database have reported and the vast bulk of the remaining two-thirds will report between now and Friday. Suffice to say, it will be a busy week.

One third in, beats are running at 36% and misses at 25% and ratings downgrades from brokers are outpacing upgrades by 2 to 1. We have to go back to the February 2015 season to find a similar breakdown – back then beats totalled 36% and misses 26% and downgrades outnumbered 3 to 1. In both cases the overriding theme was not one of poor performance but one of share price over-valuation.

In April 2015, the ASX200 peaked at 6000. In February this year it reached 4800. You have been warned.

Mind you, over the course of February 2015 the index rallied 6%. Over August 2016, the index has gone nowhere.

More of the Same

At least the local market has earnings season to focus on. With the US earnings season now all but over, Wall Street has nothing to focus on.

Friday night did see another Fedhead talk up a possible Fed rate hike and that’s likely why the Dow was down a hundred points early in the session. Overall, Wall Street is affording little credence to Fedspeak and as such Wall Street closed mildly lower on the session, likely reflecting no more than a typical Friday square-up.

The Dow closed down 45 points or 0.2% while the S&P lost 0.1% to 2183 and the Nasdaq was flat.

There is nonetheless a reasonable amount of economic data due this week for Wall Street to contemplate and at week’s end, the infamous Jackson Hole symposium will feature a speech from Janet Yellen. This gathering of central bankers in recent years provided the unofficial announcements of Ben Bernanke’s various QE programs.

Commodities

West Texas crude ticked up another US19c to US$48.52 on Friday night and talk now is of 50 being regained. The recent bounce has been all about speculation Saudi Arabia may be able to put together an agreement on a production freeze and the relevant OPEC meeting is still a month off, so there is time.

No one really believes a freeze will happen.

The US dollar index was up 0.3% to 94.50 and nickel was the only base metal not to post a fall in London, albeit no move exceeded -1%.

Iron ore rose US20c to US$61.00/t.

Having spent the week grafting incrementally higher, gold fell US$11.00 to US$1341,10/oz.

The Aussie saw a welcome drop of 0.7% to US$0.7634 by Saturday morning but there is growing talk of 80c being retested.

The SPI Overnight closed down 6 points on Saturday morning.

The Week Ahead

US data releases this week include the Chicago Fed national index tonight, the Richmond Fed index and new home sales tomorrow and existing home sales and FHFA house prices on Wednesday. Thursday it’s durable goods and on Friday it’s consumer sentiment alongside the first revision of June quarter GDP and Yellen’s speech at the Hole.

We’ll also see flash estimates of manufacturing PMIs for Japan, the eurozone and US across the week and Germany’s IFO business sentiment index will be closely watched on Thursday.

The only Australian data release of note this week is June quarter construction work done, due on Wednesday, which reminds us our own June quarter GDP result is due in a couple of weeks.

Otherwise, it’s all about earnings.

Today’s highlights include BlueScope Steel ((BSL)), Fortescue Metals ((FMG)) and Seek ((SEK)). There are simply too many companies reporting this week to highlight a full week’s results.

Please refer to the FNArena calendar (link below).

Rudi will appear on Sky Business on Tuesday, via Skype-link to discuss broker calls at 11.15am, then again on Thursday between 7-8pm for the Switzer Report and a third time, again via Skype-link, on Friday around 11.05am.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available in the FNArena Cockpit.  Click here. (Subscribers can access prices in the Cockpit.)

(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)

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

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article 3 months old

The Monday Report

By Greg Peel

Shanghai-ed

The triple treat high on Wall Street on Thursday night and stronger oil price ensured the ASX200 was off to a solid start on Friday morning. The opening rotation had the index up over 40 points to almost reach 5550.

There was always a risk Friday would bring some selling ahead of the weekend break given a largely steady week of trading but as it was, the index suffered a sudden drop late morning.

I have been noting so far this month that the local market has not seemed to pay any attention to Chinese data releases, which have all been to the weak side. Whether this be due to comfort in the knowledge Beijing will simply step up the stimulus pace or whether there have just been other overriding factors to consider, such as local earnings, is unclear. But it would seem that on Friday, all that changed.

Chinese industrial production rose 6.0% year on year in July when 6.1% was expected, down from June’s 6.2%. Retail sales grew 10.2% when 10.5% was expected, down from 10.6%. And fixed asset investment grew 8.1% in the year to July, down from 9.0% to June and missing 8.8% expectation.

The market has been assuming that at some point, Chinese data would begin to reflect the monetary and fiscal stimulus policies the PBoC and government have in place. Clearly there’s no sign yet. Breaking down that fixed asset number we see private sector investment grew 2.1% to July, down from 2.8% to June, and government investment grew 21.8%, down from 23.5%.

Private sector investment growth is negligible, and even government spending has waned. What will Beijing do?

The two sectors most directly linked to the Chinese economy – energy and materials – still managed to post the biggest sector gains on Friday, as the index bottomed out at the flatline and kicked again late afternoon to close 22 points higher. Energy rose 1.7% on the oil price pop and materials rose 1.3% despite little support from metals prices.

Elsewhere, consumer discretionary was again a winner, along with healthcare, while the telcos came under further pressure and selling in utilities – the proceeds of which still appear to be rotating into the more cyclical sectors -- continued.

Other than the release of minutes from policy meetings, there’s not a lot of central bank action to move markets this week ahead of next week’s infamous Jackson Hole gathering hosted by the Fed. There’s a fair bit of US data to get through, but for the local market it will be all about earnings results. The season steps up to full pace as the week progresses.

Not 1999

It looked more like a typical Friday session in summer for Wall Street on Friday night. Having hit the triple-high in all three major indices for the first time since December 1999, it was always a chance a breather would ensue.

The Dow closed down 37 points or 0.2% while the S&P lost 0.1% to 2184 and the Nasdaq gained 0.1% to another new all-time high.

There was, inevitably, much comparison being made on Wall Street on Friday with what transpired the last time the triple-high was achieved. Triple-highs had been achieved over a hundred times ahead of 1999, but because what followed was the Tech Wreck, and the complete routing of the Nasdaq, it’s taken this long to happen again.

Should we be worried that the biggest drop in stock markets prior to the GFC might repeat based on this triple high phenomenon? Well, consider that back then the concept of “online” was still a mystery to most people and tech stocks were trading on a Tomorrowland basis – don’t ask, just get on, as this thing is BIG.

The IPOs came fresh and fast from start-up dotcoms that had no more to offer than an idea, and given actual earnings were but a pipe dream at that stage, average PE ratios were off the scale and largely meaningless. Today’s Wall Street PEs are reasonable in historical terms. Back then the Fed funds rate was 5% and today it’s 0.5%. Back then there were more dotcom offerings than you could poke a stick at. Most disappeared the following year. Those that survived have gone on to be household names – such as the likes of Amazon and eBay for example.

So there is no basis to be worried about any sort of repeat performance, unless of course something altogether different transpires that no one ever saw coming.

Back in the real world, Wall Street was shocked by the July retail sales number released on Friday night. After three months of solid growth, including a 0.8% jump in June, economists had been predicting a bit of an easing in the pace of growth, to 0.4%. So the flat result was a surprise.

Month on month numbers are typically volatile, and at an underlying annual growth rate of 2.3%, retail sales are helping to support the US economy without knocking it out of the park. Hence we see a GDP growth rate around a mere 1%. But of course, just as commentators had been pointing to improving US data, including retail sales, as reason the Fed may yet hike this year, now that’s all out the window once more.

The US ten-year yield fell 6 basis points to 1.51% on Friday and the US dollar index fell 0.2% to 95.68.

The US stock indices held their ground. It may have been a weak result for July retail sales, but last week featured a lot of surprisingly good (or less-bad) results from longstanding US retail names and on Friday JC Penney joined that group, enjoying a 6% share price jump on its quarterly earnings result.

The oil price also jumped another 3%, despite data showing the US oil rig count climbed for the seventh week in a row. The shorts continue to jump out of oil as the Saudis talk their now hackneyed talk once more of possible production freezes. No one believes a freeze will transpire but no one’s prepared to take the risk were it to be true.

Commodities

West Texas crude rose US$1.24 or 2.9% to US$44.69/bbl.

Over in London, it appears metals traders were very much focused on the weak Chinese data. Throw in the weak US retail sales number, and nickel fell 4%, copper 2% and zinc 1.5%.

Iron ore rose US60c to US$60.20/t.

Gold is slightly lower at US1335.70/oz.

The Chinese numbers also had a notable impact on the Aussie, which is 0.7% lower at US$0.7650.

The SPI Overnight closed down 11 points or 0.2% on Saturday morning.

The Week Ahead

Earnings, earnings and more earnings to hit the local market this week – too many to offer weekly highlights. Among today’s reporters are Ansell ((ANN)), JB Hi-Fi ((JBH)) and Newcrest Mining ((NCM)), while National Bank ((NAB)) will provide a quarterly update.

Local data this week include tomorrow’s minutes of the August RBA meeting, which gave us a cut, and the June quarter wage price index on Wednesday.

US data this week include the housing sentiment index and Empire State activity index tonight, CPI, housing starts and industrial production tomorrow, the minutes of the Fed meeting on Wednesday and the Philly Fed activity index on Thursday.

Tomorrow night also sees the monthly ZEW investor sentiment index for the eurozone, which presumably will provide some indication of what Europe thinks about a Brexit.

Rudi will appear on Sky Business on Tuesday, via Skype-link, to discuss broker calls at 11.15am and repeat it all again on Friday, at around 11.05am.
 

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

The last two weeks were merely a curtain raiser – next week sees the local earnings season really shift into gear. We’ve now reached the point at which there are too many companies reporting to suggest highlights, so please refer to the FNArena calendar (link above).

For the record, the first two weeks have produced 42% beats and 29% misses, a balance of 11/11 broker up/downgrades and a 3% net target price increase. But in volume terms, it’s very early days.

As earnings take focus there is very little in the way of local economic data to consider next week, beyond the release of the minutes of the August RBA meeting. We’ll also see minutes from the Fed and ECB over the week.

US data releases next week include housing sentiment and starts, industrial production, inflation and the Empire State and Philly Fed activity indices.

With US earnings season winding down, Wall Street sitting at new highs and Fed speculation forever rife, US data are becoming increasingly critical.
 

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article 3 months old

The Monday Report

By Greg Peel

Rotation

5500 has become the new barrier for the ASX200 as the local market continues to show signs of wanting to push higher. On Friday, a steady morning rally took the index up 37 points to 5512 but a drift-back in the afternoon meant a close of only up 21, at 5497.

There was, of course, Friday night’s US jobs report to consider and it was a Friday, so no doubt there was some typical squaring up ahead of the weekend.

Looking at the sector moves however, Friday’s action screamed rotation. The best performing sectors were energy, up 1.1% on a small move up in the oil price, Materials, up 1.7% despite lower metals prices, and consumer discretionary, up 0.7% having been sold down over the week.

The only sectors to post losses were utilities, telcos and consumer staples, while all other sectors posted small gains. This sector spread screams rotation, from defensives to cyclicals. This is not the first time we’ve seen such action in the local market lately and often the defensives come roaring back, but at elevated levels, we may be reaching the point where reliable yield is just too expensive.

If cyclicals are now going to take the baton, they’ll still need some incentive to do so. Results season will provide some individual direction.

Good is Good

The US added 255,000 jobs in July, seasonally adjusted, smashing expectations of 180,000. The unemployment rate was unchanged at 4.9% despite an increase in the participation rate, suggesting those coming back to look for work found it. Wages increased by a healthy 0.3%.

It was the jobs report of an economy in good shape. But in the upside-down world in which we currently reside, tipping what Wall Street’s response to the report might be is not straightforward. Stocks could have risen on the good news is good news assumption or fallen on the good news is bad news assumption of a Fed rate rise being back on the cards. Either response was going to be explainable.

As it was, Wall Street liked it. The Dow closed up 191 points or 0.1%, the S&P rose 0.9% to a new all-time high 2182 and the Nasdaq also reached a new all-time high in gaining 1.1%.

Perhaps the reason why Wall Street chose “good news is good news” over “good news is bad news” is evident in the move in the Fed funds futures, which is cited as representing the chance of a Fed rate rise. The chance of a September hike moved up to a mere 18% from 9%, while December rose to 46% from 32%.

Great jobs report or not, virtually no one is expecting a September rate rise. And even December is yet to reach a 50/50 bet. Aside from all other data, there will be another jobs report before the September meeting. The general belief is that the US economy is beginning to look healthier – certainly healthy enough to justify a rate rise – but that the Fed will simply remain too timid to do so.

There is also the matter of what other central banks are up to. The BoE just delivered a substantial easing. The BoJ disappointed but eased further nevertheless. The RBA cut its rate. China is pursuing various measures. Around the globe, major economies are in easing mode. That, by default, is as good as a Fed rate rise.

And there’s the matter of the US dollar. It jumped 0.5% on Friday night to take its index to 96.24. A rising dollar will dampen the still “modest” US recovery. The Fed should not, by rights, pay attention to exchange rates but in the increasingly “globalised” world, of course it does.

The chance of a September rate rise may still be low but other markets were making adjustments on Friday night. Aside from the stronger greenback, the US ten-year bond yield rose 8 basis points to 1.58% and gold fell US$25.00 to US$1335.40/oz.

With the US results season now in its tail end, and everyone happy that was another not-as-bad-as-feared quarter, attention will now once again shift to central banks and economic data.

Commodities

A strong US jobs number also creates a push-pull for commodity prices. Gold aside, given its not a commodity per se, a healthy US economy is good for commodities but the stronger greenback offsets.

On Friday night we saw West Texas crude up US16c to US$41.97/bbl.

Nickel and zinc rose 0.5% and aluminium 1.5% while copper fell 1% and lead 0.5%.

Iron ore jumped US$2.00 to US$60.70/t.

Alas, despite the stronger greenback, the Aussie is only 0.1% weaker at US$0.7618.

The Week Ahead

The SPI Overnight closed up 31 points or 0.6%.

China will be back in the frame this week. Today sees July trade numbers, Tuesday inflation and Friday the monthly dump of industrial production, retail sales and fixed asset investment data.

On the central bank rounds, it’s over to the RBNZ to cut its rate on Thursday, as is expected.

It’s a quiet week for data in the US until week’s end. Tuesday sees June quarter productivity ahead of Friday’s retail sales, inventories, PPI and consumer sentiment.

In Australia we’ll see ANZ job ads today, NAB business confidence on Tuesday and Westpac consumer confidence on Wednesday. Wednesday also brings the critical monthly housing finance numbers.

The local results season steps up a gear this week.

Highlights will come from among the banks, with Bendigo & Adelaide ((BEN)) reporting today and Commonwealth Bank ((CBA)) on Wednesday, with ANZ Bank ((ANZ) offering a quarterly update tomorrow.

Classifieds will also feature, thanks to reports from Carsales.com ((CAR)) and REA Group ((REA)) tomorrow and Fairfax Media ((FXJ)) on Wednesday.

Other results of interest among the many this week include Transurban ((TCL)) and Cochlear ((COH)) tomorrow, OZ Minerals ((OZL)) and AGL Energy ((AGL)) on Wednesday and Goodman Group ((GMG)) and Telstra ((TLS)) on Thursday.

Rudi is attending and presenting at the AIA National Conference this week and will appear on Sky Business on Thursday between 7-8pm for the Switzer Report and again on Friday, through Skype-link, at around 11.05am to discuss broker calls.
 

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

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

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

We’ve had an RBA cut, a lack of action from the BoJ and extensive action from the BoE and tonight, the US jobs report may or may not fuel further Fed speculation. The RBNZ is a chance of cutting rates next week and the following week sees the ECB in the frame.

The world is being run by central banks.

While this bodes well for global stocks the truth will out in the local market next week as reporting season shifts into second gear.

Bank results feature next week as Bendigo & Adelaide Bank ((BEN)) and Commonwealth Bank ((CBA)) report earnings and ANZ Bank ((ANZ)) provides a quarterly update. Classifieds also feature with results from Carsales.com ((CAR)), REA Group ((REA)) and Fairfax Media ((FXJ)) while Cochlear ((COH)), Transurban ((TCL)), AGL Energy ((AGL)) and Telstra ((TLS)) provide other highlights.

On the data front, China is back in focus next week with trade, inflation, industrial production, retail sales and fixed asset investment numbers all due.

It’s a quieter data week in the US until retail sales on Friday, while locally we’ll see ANZ job ads and the NAB business and Westpac consumer confidence surveys as well as housing finance.

The RBA governor will speak on Wednesday.
 

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article 3 months old

The Monday Report

By Greg Peel

BoJ Disappoints

Well I hate to say I told you so, but I told you so. Whenever the world expects the Bank of Japan is about to unleash monetary shock & awe, it always disappoints. Then when no one’s paying much attention, it surprises with an extensive package.

The world was sure the BoJ would deliver something substantial on Friday – increased QE and/or a cash rate further into the negative, and the central bank itself had previously dropped a few hints. But Friday’s meeting brought no change to QE or rates, but rather the BoJ will increase its annual purchase of Japanese stock ETFs (exchange traded funds) by almost double, to around US$58bn.

The news lifted the Nikkei a little but sent the yen soaring, given the world was set for something more aggressive. It’s now over to the freshly mandated Japanese government to come up with something more substantial on the fiscal front.

The Australian stock market was bumbling along looking very “Friday” during the morning ahead of the BoJ announcement, which was worth a drop of 20 points. The index recovered late in the session, probably reflecting the fact it was the last day of the trading month and fund managers would have been keen for the index to close on a 2016 high.

With China such a focus, it’s easy to forget the importance of Japan as a trading partner, and specifically a buyer of iron ore, coal and LNG. The oil price had been down on Thursday which might otherwise explain a 1.3% drop for the energy sector on Friday, but iron ore was up strongly, base metal prices were up and the materials sector finished down 1.2%.

Elsewhere, a 1.3% gain for consumer discretionary is a “risk on” trade, probably backed by hopes of an RBA rate cut tomorrow, but this was countered by the biggest mover of the day – utilities, up 1.5%. Ditto on the RBA, so as usual, the markets are simply playing the central banks. And why wouldn’t you?

Could be some disappointment tomorrow if the RBA doesn’t oblige.

No Fed Rate Hike?

So we’ve covered the BoJ and RBA, so now we must move on to the Fed.

Economists had forecast a 2.6% growth rate for the US June quarter GDP. On first estimate, it came out at 1.2%. The March quarter GDP was also revised down to 0.8% from 1.1%. The culprit within the June numbers was a 3.2% decline in business investment – the largest since the GFC.

The US dollar index had fallen a full 1.2% on Saturday morning to 95.52 on a combination of the weak GDP result and the surging yen.

Yet the US stock market remained as it has been of late, as idle as a painted ship upon a painted ocean. The Dow fell 24 points or 0.1% while the S&P rose 0.1% to 2173 and the Nasdaq rose 0.1%. Over the last eleven trading sessions the S&P500 has moved in a range of 0.9%. The last time that happened was in 1970.

Fundamentally, one would suggest therefore that the US market is looking a bit toppy after its sharp rebound post-Brexit. Technically however, this stall in the rally without a pullback is deemed a bullish sign.

The biggest drag on the Dow on Friday night was ExxonMobil, which posted its worst quarter in some time after more than halving earnings compared to the same quarter 2015. The result was a miss. Fellow Dow component and oil producer Chevron also posted a miss but managed to avoid share price punishment.

The major take-out from Friday night was nevertheless another diminishing of Fed rate hike expectations. September now appears unlikely, unless there are some astounding data between now and then (US jobs this week).

Commodities

The big drop in the dollar and reduced rate hike expectations predictably had gold rising US$15.80 to US$1350.40/oz.

The story was more mixed in base metal markets, where metal-specific stories are more dominant at present. Aluminium jumped 2% and zinc 1.5%, but copper and lead only managed 0.5% and nickel fell 1%.

Iron ore fell US40c to US$58.80/t.

After having a good look at its 200-day moving average on the downside, West Texas crude rose US30c to US$41.40/bbl.

On greenback strength the Aussie was up 1.3% at US$0.7598 on Saturday morning.

The SPI Overnight closed up 17 points or 0.3%.

Not Stressed

Not long after Wall Street, and thus the world, closed for the weekend, the results of the latest UK/EU bank stress tests were released. There was a lot of eye-rolling when the bulk of 51 banks assessed were given a thumbs-up.

The tests are supposed to determine whether a bank has enough capital to survive another GFC-style shock. However, unlike the Fed’s equivalent tests on US banks, the European tests have no quantitative hurdles built in. The assessment is qualitative. The sceptics would say this allows the results to be prima facie positive in order to avoid a compounding panic on the day.

It was also noted the results provided no “test” to incorporate Brexit or negative interest rates. Nor were the results for Greek and Portuguese banks published – those banks are informed privately. In the end, the only banks deemed to be in trouble were the ones the world knew were in trouble anyway – mostly Italian.

The Week Ahead

On the subject of Fed focus, the US non-farm payrolls report for July is out on Friday night, preceded by the private sector report on Wednesday night.

Other US data releases this week include the manufacturing PMI and construction spending tonight, personal income & spending and vehicle sales tomorrow, the services PMI on Wednesday, factory orders and chain store sales on Thursday and the trade balance on Friday.

Today is manufacturing sector PMI day across the globe, with Beijing also throwing in China’s service sector PMI. Wednesday sees everyone else’s services PMI.

The Bank of England will meet on Thursday night but having done nothing at the last meeting not long after the Brexit vote, it’s unlikely to move at this meeting.

Aside from PMIs, Australia will see house prices and new home sales today, building approvals and the trade balance tomorrow, and retail sales on Thursday.

The RBA will meet tomorrow and publish a quarterly Statement on Monetary Policy on Friday. The chance of rate cut tomorrow is currently deemed to be 50/50.

Welcome to August, and that means welcome to result season proper. Things start slowly this week before snowballing through the month. Report highlights this week include those of Rio Tinto ((RIO)) on Wednesday, Suncorp ((SUN)) and Tabcorp ((TAH)) on Thursday and Virgin Australia ((VAH)) on Friday.

It’s a long weekend in NSW thanks to Banking Holiday today. The ASX remains open but things might be a little slow.

Rudi will appear on Sky Business on Tuesday via Skype-link to discuss broker calls at around 11.15am. He'll re-appear in the studio on Thursday, 12.30-2.30pm and does the Skype-link again on Friday, 11.05am.
 

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

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

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

We await what the Bank of Japan has in store today and tonight we see first estimates of June quarter GDP for both the eurozone and the US. Next week, the local earnings result season begins in earnest.

Monday is a bank holiday in NSW. The ASX is open but things may be a little slow. It’s the first of the month nonetheless so we’ll see a round of manufacturing PMIs from across the globe, and both manufacturing and services for China. Services PMIs for the rest of the world are due on Wednesday.

The RBA will meet on Tuesday and at this stage the market sees a rate cut as a 50/50 bet. During the week we’ll see numbers for building approvals, trade and retails sales as well as the PMIs. The RBA will also issue a quarterly Statement on Monetary Policy.

The Bank of England will also meet next week but having not made any policy changes following the Brexit vote, and with the Brexit process yet to be triggered, it is likely the BoE will continue to wait and watch.

US data next week include construction spending, personal income & spending, vehicle sales, chain store sales and factory orders. Being the first week of the month it’s jobs week, thus we’ll private sector numbers on Wednesday and non-farm payrolls on Friday. The Fed does not meet again until September.

Several companies will post earnings next week, including Rio Tinto ((RIO)), Downer EDI ((DOW)), Tabcorp ((TAH)), Suncorp ((SUN)) and Virgin Australia ((VAH)).
 

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article 3 months old

The Monday Report

By Greg Peel

Predictable

The dip overnight on Wall Street provided an excuse but realistically it was an all too predictable session on the ASX on Friday assuming no unexpected news. We had a solid run-up during the week, profits are often locked in ahead of a weekend, and next week sees critical central bank meetings that offer reason to move back to the sidelines to see what transpires.

The consumer sectors had been leaders in the rally over the week, so no great surprise they were the underperformers on Friday. Telcos also came in for some more selling, but otherwise downward moves across sectors were minimal and materials posted a sole gain with a 0.2% increase.

The pullback put the ASX200 pretty much on the 5500 level, which is rather neat, and suggests a pivot point for what happens next. The technicals remain generally bullish at this stage but we’ll still need some sort of fundamental justification to move into the next up-leg.

While markets across the globe may go quiet early this week ahead of the Fed meeting and statement release on Wednesday night, in Australia we will also see the release of June quarter CPI numbers on the Wednesday ahead of the Fed. The RBA has left the door open for an August rate cut were the June numbers to again be weak. Economists are forecasting weak numbers.

We also saw falls in commodity prices on Friday night, which should weigh on the ASX200 this morning.

Poised

The focus on Wall Street this week is clearly on the Fed, although US indices did manage slight gains on Friday night. The Dow closed up 53 points or 0.3%, the S&P gained 0.5% to 2175 and the Nasdaq rose 0.5%. The Dow and S&P both posted new highs.

On the US earnings front, the trend continues to be positive, or at least “less bad”. General Electric’s (Dow) result disappointed somewhat on Friday but with 100 of the 500 S&P stocks now having reported, the running change in earnings per share is minus 4.2% compared to a consensus forecast ahead of the season of minus 5.3%.

There are still 400 stocks to report over the next couple of weeks.

Meanwhile, the early earnings trend may be positive, thus justifying Wall Street strength, but the indices were again led by telcos and utilities on Friday night. The hunt for yield continues to override any notion of economic improvement.

US economic data have nevertheless been positive this month, and the trend continued on Friday night. A flash estimate suggested the US manufacturing PMI for July would come in at 52.9, up from 51.3 in June and well ahead of 51.5 forecasts.

It is this sudden turnaround in US data that has Wall Street assuming the Fed must now be seriously looking at a rate hike sooner rather than later, given the feared Brexit disaster did not transpire. Up until this month US data had been a bit too mixed to assure a hike, and the shockingly weak May jobs number was the cruncher. But since the June jobs number came screaming back, a string of very positive releases including retail sales, industrial production and various housing numbers has followed.

There is no hike expected on Wednesday night. But markets will be looking to see just what sort of hint the FOMC may be prepared to provide of a September move.

The Fed is under no pressure to hike this week, which is handy given Friday brings a Bank of Japan policy meeting. Strictly the Fed should not be in any way beholden to what Japan does, but given some form of shock & awe is being assumed out of Tokyo, the FOMC will no doubt be keen to see what that is before having to make its own decision.

Commodities

The issue of a Fed rate hike is one commodity markets will be concerned about. While the justification for a hike – stronger US economy – is positive for commodity prices, a consequentially stronger US dollar is not. The US dollar index rose 0.5% to 97.35 on Friday night.

An outage of a commodity trading platform during the Asian session meant many traders were cut off from base metal markets as trading shifted over to London, ensuring very light volumes were then traded on the LME. This didn’t stop nickel falling 3%, although nickel has been the outperformer of late, while other metals fell by small amounts except aluminium. It’s been the underperformer of late, and rose slightly.

Iron ore fell US40c to US$55.70/t.

West Texas crude fell US29c to US$44.25/bbl.

Gold doesn’t quite know whether it’s Arthur or Martha at the moment, as it shifts back and forward inside a 1320-40 range. Friday night’s jump in the greenback prompted a fall of US$8.60 to US$1322.10/oz.

The strong greenback ensured the Aussie was down half a percent at US$0.7455 on Saturday morning.

The SPI Overnight closed up 4 points on Saturday morning.

The Week Ahead

Fed on Wednesday night, BoJ on Friday.

Ahead of the Fed meeting, the US will see new home sales, Case-Shiller house prices, consumer confidence and the Richmond Fed index on Tuesday, and pending home sales and durable goods on Wednesday. Thereafter, Friday will bring the first estimate of US June quarter GDP.

The UK will report its GDP on Wednesday, and the eurozone on Friday, although both reflect a pre-Brexit Europe.

Along with the BoJ meeting on Friday, Japan will see a raft of June data, including inflation, retail sales, industrial production and unemployment.

On the local stock front, the last of the resource sector quarterly production reports merge this week with early movers in what is otherwise the August result season.

Among the production reporters we’ll see Newcrest Mining ((NCM)) today, Fortescue Metals ((FMG)) and Independence Group ((IGO)) on Wednesday, and Origin Energy ((ORG)) on Friday.

Thursday will bring earnings reports from CYBG Plc ((CYB)), Henderson Group ((HGG)), GUD Holdings ((GUD)) and ResMed ((RMD)).

Thursday also sees the Macquarie Group ((MQG)) AGM, at which guidance will be updated.

Rudi will appear on Sky Business via Skype-link on Tuesday to discuss broker calls, 11.15am. Then on Wednesday he'll host Your Money, Your Call, 8-9.30pm. On Thursday he'll re-appear in the studio, 12.30-2.30pm and later that day he'll join Switzer TV on the channel. On Friday he'll repeat the Skype-link up at around 11.05am.
 

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

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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

The Fed will meet next week and release its latest monetary policy statement on Wednesday night. While no rate change is expected, the odds are firming once more for a September hike, given the markets’ shrugging off of Brexit and a run of strong US data. Further clues will be sought.

The Bank of Japan meets on Friday and while it’s always difficult to know what might transpire, markets are assuming fresh stimulus of some kind will be announced. The resounding win by the government in the recent upper house election supposedly provides a mandate to attack the persistently strong yen once and for all.

These two meetings will be very much the focus of next week, possibly keeping markets at bay until developments are known. But the US reporting season rolls on, and next week also sees initial June quarter GDP estimates from all of the UK (Wednesday), US and eurozone (Friday).

There will be more data releases to ponder in the US next week, including house prices, home sales, consumer confidence, durable goods, the Richmond Fed index and Chicago PMI.

Friday will not only bring the BoJ meeting but also a dump of Japanese data, including inflation, industrial production, retail sales, and unemployment numbers.

Ahead of the Fed release on Wednesday night, Australia’s June quarter CPI numbers will be released. We recall it was the weak March quarter CPI numbers which prompted the RBA into a swift rate cut in May, and almost universal expectations of an August rate cut are based on expectation of more weak numbers in next week’s release.

In the local market, next week will see a late rush of resource sector quarterly production reports coinciding with the first trickle of early season corporate earnings releases.

Production reporters include Newcrest Mining ((NCM)), Fortescue Metals ((FMG)), Independence Group ((IGO)) and Origin Energy ((ORG)).

Earnings reporters include CYBG Plc ((CYB)), Henderson Group ((HGG)), GUD Holdings ((GUD)) and ResMed ((RMD)).

Macquarie Group ((MQG)) will also hold its AGM next week at which a guidance update is always a potential share price mover.


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