Tag Archives: The Week Ahead

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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

Tonight’s US jobs report should serve to help tighten up assumptions of whether the Fed will or will not hike in June, albeit there will be one more jobs report before that meeting. The market is forecasting 200,000 jobs. If that is accurate, we probably can’t draw any real conclusion.

US data releases are thin on the ground next week until Friday, when retail sales, inventories, the PPI and consumer sentiment numbers are due.

China will release inflation numbers on Tuesday.

The Bank of England will hold a policy meeting on Thursday but one assumes monetary policy must now be on hold ahead of the Brexit vote in June.

The eurozone will release a first estimate of March quarter GDP on Friday.

Locally, ANZ will release its jobs ads series next week and Westpac its consumer confidence survey. Housing finance numbers are also due.

Commonwealth Bank ((CBA)) will follow up this week’s bank results with a quarterly update while Orica ((ORI)), Incitec Pivot ((IPL)) and AusNet Services ((AST)) will report interim earnings over the week.

QBE Insurance ((QBE)) will hold an investor day and there will be a handful of AGMs held throughout the week, including AMP ((AMP)) and Oil Search ((OSH)).
 

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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

Tonight will see the release of the first estimate of eurozone March quarter GDP. The US will see personal income & spending data, including the Fed’s preferred PCE measure of inflation.

Last night’s weak US GDP number would suggest a June rate hike from the Fed is now less likely, although the decision by the Bank of Japan not to cut further has some suggesting the Fed’s door is now open in June.

On Sunday, Beijing will release China’s April manufacturing and services PMIs.

Australia, Japan, the eurozone and US will all release manufacturing PMIs on Monday. China and the UK will be closed for May Day on Monday, so the UK and Caixin China manufacturing PMIs are due on Tuesday. Services PMIs are due on Wednesday with the UK and Caixin again a day later.

Other data releases for the US next week include construction spending, vehicle and chain store sales, factory orders, trade and productivity. Wednesday sees the ADP private sector jobs report for April and Friday brings the all-important non-farm payrolls numbers.

Tickets are now hard to come by for the RBA’s monetary policy announcement on Tuesday. Some economists had already forecast a May rate cut on the strength of the Aussie but as commodity prices continued to rally, not all economists held fast. Then came this week’s CPI disinflation shock. About half the market is now tipping a cut on Tuesday.

Aside from PMIs, Australia will also see building approvals, retail sales and trade numbers next week.

On the local stock front, it’s bank earnings season. Results are due from all of Westpac ((WBC)), ANZ Bank ((ANZ)), National Bank ((NAB)) and Macquarie Group ((MQG)).

The quarterly updates and investor days continue to flow, with Telstra ((TLS)) among the highlights next week.  Woolworths ((WOW)) will report quarterly sales. The AGM season also starts to hot up from next week.
 

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The Monday Report (on Tuesday)

By Greg Peel

Friday

Friday’s local session was a game played in two halves. Taking a lead from Wall Street, which having rallied up to psychological levels on its major indices decided it was time to take some profits, the ASX200 fell sharply from the open.

It nevertheless appeared to be more of a case of buyers standing aside rather than sellers piling in, thus when the morning’s opening rotation was complete and close to 50 points were lost, the buyers were ready to get in at better levels. If we truly are in rally mode right now, such dips offer welcome opportunities for previous slow movers.

So by lunch time the index was back to square. But then someone pointed out that it was a long weekend, and thus Friday afternoon was all about drifting off again as traders locked in what should have been some solid short term profits and got out of the city as soon as possible.

We can always take such Fridays with a grain of salt. The profit-taking tale is most obvious if we look at the biggest sector fall on the day, that of materials, which dropped 2.4% on a day iron ore had rallied 7%. You don’t see that too often. But given the likes of BHP and co had run up some 30% from their lows as the iron ore price pushed sharply higher, it seemed like a great opportunity to lock that in. Particularly if that 7% jump seemed like a possible blow-off top.

The fall in energy was less dramatic at 1.1%, but oil prices were actually down a tad. Elsewhere, the two standout sectors in what was otherwise a fairly general pullback were the banks, which didn’t move, and utilities, which were hit 1.7%.

Interesting that the banks, which have also seen a run good run this month, should not see any notable profit-taking a day after a major broker issued a warning that the two smaller members of the Big Four could well cut their dividends next month.

As for utilities, well I noted in Friday morning’s Overnight Report that selling on Wall Street was driven mostly by yield sectors, including utilities, following a week of gains for the US ten-year bond yield. It looks like the local market saw this as a lead.

Friday Night

The Dow closed up 21 points or 0.1% to scrape back over 18,000. The S&P was flat at 2091 as the Nasdaq tumbled 0.8%.

If Bridge Street’s session was a game played in two halves, Wall Street’s session on Friday night was a game played across two halves of the market.

We tend to call stock such as Microsoft and Google “old tech” because they’re last century’s stars while the likes of a Facebook or a Netflix represent the “new tech” of the new millennium. But if we put those two together and call them “new(ish) tech” we can compare them to what we might call “very old tech”, such as railroads.

After the bell on Thursday night, earnings misses were posted by Microsoft and Google. This clearly put the frighteners through the market on Friday night, such that all tech names were unloaded in a hurry, new or old. That’s why the Nasdaq was down 0.8%.

But two major railroads posted solid results and went for a run, sending the Dow Transports (separate to the Dow Industrials) surging. Within the Dow Industrials, General Electric – the only remaining company to have been included in the first ever Dow Jones Average – posted an earnings beat while Caterpillar, which has seen the going very tough as commodity prices collapsed, suggested the bottom is nigh.

Honeywell, another old world stock (even aerospace is an old industry), also posted an earnings beat. Having run up strongly ahead of their releases, all three of these industrials saw slight dips on the day, but the distinction is clear. McDonalds is another Dow stock that is pretty old world these days, and it posted its best quarter in a very long time.

Hence the divergence on the day between the Dow and the Nasdaq, with the broad market S&P holding fast in the middle.

The US oil rig count fell by another 8 rigs last week to 343, according to Baker Hughes’ regular Friday report, marking a fifth straight weekly decline. West Texas crude rose US27c to US$43.70/bbl on Friday night and Brent rose US39c to US$45.12/bbl.

Zinc and nickel missed out on an otherwise strong session on the LME, which saw aluminium, lead and tin all up 1% and copper just a little shy.

Sentiment has clearly swung to the positive in commodities markets (and not just in rocks, but in agriculturals as well it should be noted). Recent strength has come despite the US dollar index having rebounded rather sharply over the week. It was up another half a percent on Friday night at 95.12.

This was good for the Aussie, which was able to come down 0.4% to US$0.7710 despite the big jump in the iron ore price, but not good for gold, which fell US$15.80 to US$1232.20/oz.

On Saturday morning the SPI Overnight closed up 26 points or 0.5%.

Monday Night

The US dollar index fell back again last night, by 0.4% to 94.79. The Aussie, however, is little changed from Saturday morning at US$0.7714.

And having been a feature of Friday night’s trade, the Dow Transports also fell back again last night.

Tech names continued to remain under pressure nonetheless, with all eyes on Apple’s earnings report tonight. But across Wall Street in general last night was a case of entering a new week which is not only loaded with earnings results and heavy on economic data releases, but which also sees two significant central bank policy meetings – those of the Fed and the Bank of Japan.

No one expects anything much different from the Fed on Wednesday night but the market will still look for any clues as to whether June might still be considered a rate hike possibility. The Bank of Japan has markets somewhat concerned nevertheless, as no one’s at all sure what might transpire. At its last meeting the BoJ lowered its cash rate into the negative, yet the yen has done nothing but rise ever since.

Could the BoJ go even further into the negative? While central bank stimulus around the globe is usually welcomed by stock markets, Japan’s negative rates represent an experiment that many worry could have unintended consequences.

Speaking of unintended consequences, Beijing is currently caught between a rock and a hard place as it tries to provide ample liquidity to the Chinese economy to prevent a sharp decline in growth while at the same time trying to keep a lid on debt, and potential asset price bubbles.

Over the weekend the PBoC requested that China’s major banks pare back their lending targets to 70% of what they were at the beginning of the month.

Oil prices fell from the open last night and helped the Dow down to almost a 150 point drop, but as oil eased back and other influences took over, Wall Street recovered. The Dow closed down 26 points or 0.2% while the S&P lost 0.2% to 2087 and the Nasdaq fell 0.2%. The uniformity of the index fall, traders suggests, signals positioning ahead of the central bank meetings rather than micro forces.

So since the ASX closed for business on Friday, the Dow was up 21 and then down 26. Just to drive home the fact little has changed on a net basis since Friday, the SPI Overnight closed up 26 points on Saturday morning and down 25 points this morning for a net one point gain.

Oil prices fell last night because Kuwait production is back in full swing following the three-day strike, and the country intends to increase its production levels. Iraq is close to reaching a production record, Iran continues to ramp up, and Saudi Arabia is close to completing a major oil field expansion.

If you can’t freeze it, pump it as fast as you can. It is probably surprising that this morning, West Texas crude is down only US71c at US$42.99/bbl and Brent is down US34c at US$44.78/bbl.

Volumes on the LME were to the low side last night as metal traders, too, await this week’s central bank meetings. In thin trading, copper lost what it gained on Friday night, zinc fell 2% and lead fell 3%.

A spot iron ore price is proving difficult to get hold of this morning, probably because of the long weekend, but I can report a price being quoted this morning after two sessions of US$66.07/t, down from US$68.70 on Thursday night.

Gold is up US$5.70 at US$1237.90/oz.

The Week Ahead

As noted, the Fed will release its April policy statement on Wednesday night and the Bank of Japan will meet on Thursday, as will the Reserve Bank of New Zealand.

A busy week for US data releases, coinciding with the busiest week for US earnings results, sees durable goods orders, Conference Board monthly consumer confidence, Case-Shiller house prices and the Richmond Fed index tonight, pending home sales on Wednesday and the first estimate of March quarter GDP on Thursday. The market is forecasting a mere 0.7% annual growth rate.

Friday sees personal income & spending, the Chicago PMI and Michigan Uni fortnightly consumer sentiment.

The UK will publish its first estimate of March quarter GDP on Wednesday and the eurozone will follow suit on Friday.

While attention will be focused on the BoJ on Thursday, Japan will also see monthly releases for inflation, unemployment, retail sales and industrial production ahead of a public holiday on Friday.

Monetary policy debate downunder will focus this week on Wednesday’s release of the March quarter CPI numbers, followed on Friday by the PPI.

On the local stock front, this week brings another mix of resource sector quarterly production reports, quarterly updates from other sectors, investor days and AGMs.

Production report highlights this week include those from Independence Group ((IGO)) on Thursday and Origin Energy ((ORG)) on Friday. ResMed ((RMD)) will release quarterly earnings on Wednesday, Mirvac Group ((MGR)) will issue a quarterly report on Thursday, and Thursday also brings investor days from Cochlear ((COH)) and Computershare ((CPU)).

Rudi is on leave this week.
 

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

It’s a long weekend in Australia this weekend, lest we forget, which means there’ll be two offshore sessions to consider when local trading resumes on Tuesday. These will be covered by next week’s Monday Report (on Tuesday).

It’s a big week next week in the US, featuring a Fed meeting, the first estimate of March quarter GDP, and a raft of monthly data to boot. These include new and pending home sales, durable goods, consumer confidence, personal income & spending, including the Fed’s preferred PCE inflation measure, the Richmond Fed index and Chicago PMI.

Next week will also feature monetary policy meetings for the Bank of Japan and RBNZ, while the UK and eurozone will also publish initial GDP estimates.

Australia’s inflation update will be addressed by the release of the March quarter CPI next week. Monthly private sector credit numbers are also due.

The local quarterly update season rolls on next week, with Independence Group ((IGO)) and Origin Energy ((ORG)) offering highlights among resource sector reports and Mirvac Group ((MGR)) among the non-resource reporters. Cochlear ((COH)) and Computershare ((CPU)) will hold investor days while ResMed ((RMD)) will release March quarter earnings.


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The Monday Report

By Greg Peel

No Deal in Doha

Shock horror. The meeting of OPEC and non-OPEC oil producers in Doha last night has failed to reach any agreement on a coordinated production freeze. The first market to respond this morning to the stunning news is the Aussie dollar, which fell from around US77.2c to under US76c in a heartbeat.

But in almost as short a space of time, the Aussie is currently back at US76.6c.

As to why the meeting in Doha even went ahead is a mystery. All year Saudi Arabia has said it will only freeze production if all relevant oil-producing nations, including Iran, freeze production, and all year Iran has said no. Heading into the meeting, Saudi Arabia maintained its position. As it turned out, Iran didn’t even bother to attend.

The question now is as to whether, heading into the meeting, oil and other markets had accepted the fact the whole thing was going to be a farce or whether today will bring substantial moves in response, in particular a plummeting oil price. Perhaps the Aussie has provided a clue. Were the initial response in oil prices to be a plunge, the buyers may well be ready to jump on the opportunity and damage will be limited.

There can hardly be any excuse for being surprised.

And then there’s China

Notably, the only sector not to finish in the green on the local market in Friday’s trade was energy. A slight dip suggested squaring up for Doha.

The banks and the materials sectors both had quieter sessions after their solid runs last week, up 0.5% each. This left the rest of the market, which had mostly taken a back seat last week, to pick up the ball and have a run. The consumer sectors, healthcare, telcos and utilities all posted gains of around 1% or more, with industrials just off the pace. It was a choppy session, but in the end the 0.8% gain for the ASX200 was mostly a market-wide effort.

The highlight of the day was the release, mid-session, of Chinese economic data.

China’s GDP grew by 6.7% in the March quarter, smack on expectation. That’s down from 6.8% in December, and, as the headlines in the populist press will be quick to point out, the slowest pace of growth since 2009. It may be a fact but it’s also an ignorant comparison. China’s economy has grown substantially since 2009, such that to achieve the dollar value of additional GDP represented by 6.7% growth today would have required a growth rate in 2009 well into double digits.

In the month of March, Chinese industrial production grew by 6.8% year on year, up from 5.4% in February and ahead of 5.9% forecasts. Retail sales grew by 10.5%, up from 10.2% and ahead of 10.4% forecasts. Year to date fixed asset investment grew by 10.7% over the same period last year, beating expectations of 10.3%.

While drawing upon the usual grain of salt, we may conclude from the data that the stimulus measures undertaken by Beijing last year and into this year are finally starting to see some results. But once again the caveat is the impact of volatility around the Lunar New Year break.

The Chinese numbers helped lift a wobbly ASX200 to a stronger close on Friday but it was not the sort of performance one might have expected in times past when China reported Street-beating numbers. The local resource sectors had a muted session.

Wall Street

Wall Street’s session on Friday was mostly about waiting for Doha. The WTI price fell a dollar to sit poised near the US$40 mark in anticipation. US oils stocks similarly saw a square-up.

Citigroup was the last of the major US commercial banks to report on earnings on Friday and just as had been the case for its counterparts throughout the week, Citi reported a result that was weak but not as weak as forecast. All up Wall Street finished slightly lower on Friday night but higher for the week, led by the rebound in bank stocks.

On Friday night the Dow closed down 28 points or 0.2% while the S&P fell 0.1% to 2080 and the Nasdaq lost 0.2%.

US data releases for the session were weak. Industrial production fell a greater than expected 0.3% in March to mark the sixth monthly decline in seven. The Michigan Uni fortnightly measure of consumer sentiment showed a fall to 89.7 from 91.0 at end-March, suggesting a fourth consecutive month of decline.

Bucking the trend, The Empire State activity index rose to 9.6 from 0.6 last month, to post its strongest reading since January 2015. But this series has become increasingly volatile, and could just as easily be negative next month.

Either way, Wall Street is currently supported by the Yellen Put. Weak data only serve to push out the expected timing of the next Fed rate hike.

Commodities

On Saturday morning, West Texas crude was sitting at US$40.42/bbl, down US$1.03 from Thursday night, and Brent was down US81c at US$43.07. We await tonight’s reaction to Doha.

We can say the same for base metal prices, given the direction of oil has this year been a significant factor in sentiment on the LME. Moves were mixed on Friday night, with zinc’s 1% gain the standout as copper fell 0.7%.

Iron ore fell US$1.10 to US$57.50/t.

The US dollar index had slipped 0.2% by Saturday morning to 94.70, which helped the Aussie up 0.4% to its pre-Doha level of US$0.7726. Gold rose US$6.50 to US$1234.10/oz.

The SPI Overnight closed down 4 points on Saturday morning, but that’s no longer relevant.

The Week Ahead

The US earnings season steps up a gear this week, as a range of Dow components across all sectors take centre stage. Morgan Stanley and Goldman Sachs will round out the investment banking performance, while everything from Johnson & Johnson to Google, Caterpillar and General Electric will offer a more widespread indication of the state of the US economy.

Economic data releases will come thick and fast as well, but as suggested, they lack any real clout above the Fed’s safety net.

Tonight sees housing sentiment, tomorrow housing starts and Wednesday existing home sales, while Thursday brings house prices, leading economic indicators, the Philadelphia Fed activity index and the Chicago Fed national activity index. Friday will see a flash estimate of April’s manufacturing PMI.

Japan and the eurozone will also flash on Friday. The ECB will hold a policy meeting on Thursday but no one is expecting anything new.

It’s a quiet week for Australian data, but the RBA will be in the frame nonetheless. The central bank’s Financial Stability report, released on Friday, suggests concerns over Australia’s apartment construction bubble. Glenn Stevens will speak on Tuesday, and the minutes of the April RBA meeting will be released.

There’s plenty of action on the local stock front this week. The resource sector quarterly production report season ramps up in earnest, with highlights this week featuring Oil Search ((OSH)) and Rio Tinto ((RIO)) tomorrow, BHP Billiton ((BHP)) and Newcrest Mining ((NCM)) on Wednesday, OZ Minerals ((OZL)) and South32 ((S32)) on Thursday and Santos ((STO)) on Friday.

Outside of resources, quarterly reports will be forthcoming from Transurban ((TCL)) today and Brambles ((BXB)) and Challenger ((CGF)) on Thursday. Wesfarmers ((WES)) will report quarterly retail sales on Thursday.

Cimic ((CIM)) and Woodside Petroleum ((WPL)) will hold AGMs on Thursday.

Watch the price of Woodside this morning.

Rudi will appear on Sky Business on Tuesday around 11.15am, via Skype-link, then again on Wednesday, to host YMYC 8-9.30pm, then twice on Thursday (12.20-2.30pm and Switzer TV between 7-8pm), and then again via Skype-link on Friday, usually 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

As far as anyone can tell, Saudi Arabia is not prepared to enter into a coordinated production freeze agreement with OPEC and some non-OPEC members if Iran is not prepared to join the freeze. It is clearly understood Iran is not prepared to join the freeze.

It is for this reason a meeting planned for Moscow last month was abandoned. Why, then, is Sunday’s meeting in Doha proceeding? The fact it is proceeding means oil traders are hanging on to a hope that maybe, just maybe, something positive will come out of Doha, while not really expecting anything other than a no-go outcome.

What is not entirely clear at this stage is whether or not a Doha premium is still built into current oil prices. We’ll know on Monday night.

US economic data have taken a back seat this month now that the Fed has ensured a slow approach to policy normalisation and attention has turned to quarterly corporate earnings reports. But there is still a raft of US data releases due tonight and over the next week, including industrial production, consumer sentiment, the Empire State, Philly Fed and Chicago Fed activity indices, housing sentiment, housing starts, prices and existing home sales, and a flash reading on the April manufacturing PMI.

With Wall Street poised at the top end of its longstanding trading range, the flood of earnings reports due next week will go a long way to determining whether a breakout is possible or not.

The ECB will hold a policy meeting next week.

In a largely data-free week in Australia, the minutes of the RBA’s April meeting will be released on Tuesday and Glenn Stevens will speak.

On the local stock front, the quarterly report action hots up next week with resource sector production reports now flowing freely. Among next week’s reporters are Rio Tinto ((RIO)), BHP Billiton ((BHP)), Newcrest Mining ((NCM)), Oil Search ((OSH)) and Santos ((STO)).

Non-resource quarterlies are due from the likes of Transurban ((TCL)), Brambles ((BXB)), Challenger ((CGF)) and Wesfarmers ((WES)).
 

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The Monday Report

By Greg Peel

Comeback

It was looking pretty ugly for the ASX200 at the open on Friday, with early falls suggesting we could be in for one of those pre-weekend capitulations as sentiment turned sour once more. But having opened down 70-odd points, the index very quickly found buying support.

The early drop took us down through 4900, which suggests the impetus to buy at that point was largely a technical one. Or we might simply note that every time the index has fallen through 5000 this year, and even down towards 4800, it has subsequently recovered to trade back over 5000 every time.

Outside of a 1.3% fall in the insignificant info tech sector on Friday, the banks and energy led the index to its close of down 26 with 0.8% falls. Thereafter, sector falls were lighter and fairly uniform, but for utilities which managed the only gain on the day, up 0.2%.

Sentiment this week will centre on the first of the US earnings results, along with the first quarterly reports from local stocks.

Bring it on

Janet Yellen appeared at a gathering of Fed chairs past and present after the close of US trading on Thursday evening. Joined by Volker, Greenspan and Bernanke, it was not really the forum for Yellen to be spouting any significant change of heart on current monetary policy. Not that she was likely to anyway, and she didn’t.

The yen pulled back against the US dollar ahead of the open on Wall Street on Friday after its surging run on Thursday. Prime Minister Abe had previously ruled out intervention but on Friday Japan’s finance minister said he may act against a “one-sided” yen.

The easing yen allowed the US stock markets to open with some strength, taking the Dow up 150 points in the first half hour as oil prices posted another 5% jump. On the 2016 correlation, it was a no brainer for a solid session in US stocks. But this month that correlation has broken down.

The Dow closed up 35 points or 0.2% while the S&P gained 0.3% to 2047 and the Nasdaq was flat.

Oil prices may be bouncing around a lot, but at the moment they’re not really getting anywhere. The lack of overall direction, despite day to day volatility, has meant stock traders have moved on to concentrate on other drivers. This week that means corporate earnings, which by some measures have been now forecast to fall as much as a net double digit percentage.

Forecasts have actually been getting weaker and weaker this past couple of weeks, which tends to suggest they have become a little overblown to the downside. The proof of the pudding awaits over the course of the next month. Alcoa reports tonight, then there’s a bit of a gap to week’s end when the big bank results start to flow. The pullback from the highs for the indices on Friday night, despite oil holding onto 5% gains, likely reflects squaring up ahead of the first earnings numbers.

Commodities

Last week’s US data showed a surprise drop in crude inventories. On Friday night, the Baker Hughes rig count showed a drop to 354 from 362 a week earlier and 760 a year ago. While the third straight week of lower rig counts was no great shock, the oil market is beginning to see the numbers lining up and moving in the right direction.

No one expects this weekend’s meeting in Doha to result in any meaningful supply freeze agreement between OPEC and non-OPEC members, but on last week’s US data it probably doesn’t matter that much anymore. There may yet be some disappointment if nothing eventuates in Doha, but on the wider scheme of things, earlier talk of WTI having to go back to test its US$26 low is now waning.

West Texas was up US$2.08 or 5.5% at US$39.61/bbl on Saturday morning and Brent was up US$2.26 or 5.7% at US$41.85/bbl.

Stronger oil prices provided incentive for a more positive session on the LME. Copper and zinc rose 0.5%, tin 1%, aluminium 1.5% and nickel 2%.

Iron ore fell US50c to US$53.30/t.

Gold was relatively steady at US$1238.40/oz.

The US dollar index fell 0.3% to 94.19, helping the Aussie to rise 0.6% to US$0.7551.

The SPI Overnight closed up 20 points or 0.4% on Saturday morning.

The Week Ahead

US earnings results will be closely watched at the beginning and end of this week. US date releases this week include retail sales, inventories, the PPI and Fed Beige Book on Wednesday, CPI on Thursday, and industrial production, fortnightly consumer sentiment and the Empire State activity index on Friday.

China will release its March quarter GDP result on Friday. Forecasts suggest 6.7% growth, down from 6.8% in December.

Ahead of that release, Chinese monthly inflation numbers are due today, trade on Wednesday, and industrial production, retail sales and fixed asset investment on Friday.

Housing finance numbers are due out in Australia today. Tomorrow sees the NAB monthly business confidence survey and Wednesday the Westpac consumer equivalent. The monthly jobs lottery takes place on Thursday and on Friday the RBA will release a Financial Stability Review.

On the local stock front, Energy Resources of Australia ((ERA)) is due to release its March quarter production report today, thus kicking off the resource sector quarterly production reports season. Fortescue Metals ((FMG)) reports on Wednesday and Whitehaven Coal ((WHC)) on Thursday while Rio Tinto Plc ((RIO)) will hold its London AGM on Thursday night.

The non-mining quarterly report/update/ investor day season will be kicked off by IOOF Holdings ((IFL)) on Wednesday followed by Bendigo & Adelaide Bank ((BEN)) and Transurban ((TCL)) on Thursday.

Rudi will first appear on Sky Business on Tuesday, via Skype-link around 11.15am, then again for two hours on Wednesday morning (10-midday), on Thursday he'll be back from 12.30-2.30pm and finally he'll do another linkup via Skype on Friday morning, probably around 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

Alcoa will report quarterly earnings on Monday night, unofficially kicking off what is one of the more highly anticipated US earnings seasons. Forecasts suggest high net single digit losses for the S&P500, dragged down particularly bey the energy sector but also by US dollar strength in the March quarter impacting on multinationals.

With Wall Street now having recovered the sharp losses posted earlier in the year, direction from here will be very much determined by actual earnings results.

The news vacuum in the Australian market that has persisted post February result season all the way to now may come to an end next week as quarterly reports roll in from the resource sector in particular but also from other industries. Fortescue Metals ((FMG)) is among early production report publishers and Rio Tinto ((RIO)) will hold its London AGM, while updates and investor days start to flow as well. IOOF ((IFL)), Bendigo & Adelaide Bank ((BEN)) and Transurban ((TCL)) provide their offerings next week.

China is in the frame next week as it rolls out March economic data. We’ll see inflation on Monday, trade on Wednesday and industrial production, retail sales and fixed asset investment on Friday, along with the March quarter GDP result.

US data next week include retail sales and inventories, inflation, industrial production, consumer sentiment and the Empire State activity index and Fed Beige Book.

Australia will see the NAB business and Westpac consumer confidence surveys along with the jobs lottery on Thursday. On Friday the RBA will publish a quarterly Statement on Monetary Policy.


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The Monday Report

By Greg Peel

Manipulation

It looked like a worrying start to the June quarter for the local market on Friday but really it was a reversal of the solid end to the March quarter on Thursday. On Thursday, fund managers bought up the market in general to fool you into thinking they’d actually generated better returns when in fact they were clueless. On Friday they simply sold back those trades.

So for all intents and purposes, the June quarter starts today. And where from? Well, 5000 of course. Prisoners of our own device.

Economic data were never going to matter on Friday. On any other day, news that China’s official manufacturing PMI swung back into expansion in March for the first time in eight months would have been met with cheers. Beijing’s index rose to 50.2 from 49.0 in February. Caixin’s independent measure did not quite make expansion but a move up to 49.7 from 48.0 at least corroborates the trend.

More important than China’s manufacturing sector is its services sector, which Beijing is supporting in favour of over-capacitated manufacturing. The government’s services PMI rose to 53.8 from 52.7, which also reversed the weak trend of the last couple of months.

And for the record, what’s left of Australia’s own manufacturing industry posted a PMI increase to a breakneck 58.1, up from 53.8. That’s the fastest pace of expansion since April 2004.

March is often a vacuum month for Australian corporates coming, as it does, in the wake of the February results season. Quite often not a lot happens to generate any market news and this year has been no exception. April features school holidays, which we’ve already had in Victoria and Queensland and are about to have in NSW, just to increase the potential for quieter markets.

But we do see the corporate news begin to ramp back up again in April, beginning with resource sector quarterly production reports and then moving on the ever increasing number of quarterly reports provided by the rest of the market. We are ever so quietly moving towards a US-style quarterly reporting calendar. If only we could adopt the US practice of providing homogenous EPS results for clear comparison rather than Australia’s antiquated obsession with this thing called “profit”, which is often misleading.

Around the Grounds

There may not be much left of Australia’s manufacturing industry but in Japan, manufacturing is the economy’s primary driver. It will thus be concerning for the Abe government that Japan’s manufacturing PMI fell to 49.0 from 50.2, representing the first move into contraction in eleven months.

It was steady as she goes on the other side of the world, with the eurozone’s PMI inching up to 51.6 from 51.2 and the UK similarly to 51.0 from 50.8.

Wall Street was relieved to see the US manufacturing PMI flip back into expansion at a better than expected 51.8, up from 49.5.

And suddenly, no one cared

The US added 215,000 jobs in March, although you’d have been hard-pressed to find that out on Saturday morning. The unemployment rate ticked back up to 5.0% from 4.9% but that was because the participation rate reached its highest level in two years.

As late as last year the US monthly non-farm payrolls report releases drew audience numbers exceeded only by the World Series and Super Bowl, but now the data have become relatively consistent across past months and Janet Yellen has emphatically set a dovish policy agenda, it really wasn’t going to matter what the jobs outcome was on Friday night.

If anything, a June Fed rate hike cannot be ruled out, but that does not represent a change in market view. The most important number within the data suite – wage growth – showed a better than expected 0.3% increase following a disappointing 0.1% drop in February. This is the inflation indicator Fed-watchers are targeting, but the flip-over hints at statistical noise.

On the strength of both better than expected jobs numbers and manufacturing numbers, Wall Street rallied on Friday. The Dow closed up 107 points or 0.6% while the S&P gained 0.6% to 2072 and the Nasdaq rose 0.9%.

The most interesting point to note about the rally is that it came in direct defiance of a fall in the oil price.

Oil fell 4% on Friday night and as a result, the Dow opened down over a hundred points. But traders who made the assumption the near perfect correlation still stands were in for a rude shock. Oil fell because Saudi Arabia suggested that Doha meeting or not, if Iran does not agree to a production freeze then Saudi Arabia will not agree to a production freeze.

If the near 50% rebound in the WTI price from its February low is all about hopes of co-operation between OPEC and non-OPEC producers in a concerted effort to reduce supply and support prices, then either oil traders are very stupid or the rally actually has nothing to do with such speculation. The rally is all about a market that became very oversold on panic and a subsequent short-covering scramble.

Throw in some early signs of falling US production, despite still rising inventories, lower US rig counts and a growing number of marginal producers falling by the wayside and we have sufficient reason for a rebound in oil. We can also cite a lack of major financial disaster in the US banking industry stemming from oil producer defaults and bankruptcies, as was at one point feared, as easing concerns.

The oil price had stabilised over March, but with nothing new going on, and short-covering now exhausted, it is of no surprise oil should fall back again. Perhaps Saudi Arabia was an excuse rather than a source of great angst but either way, oil is not going back to US$50/bbl until the trends noted above become more entrenched.

The fact Wall Street turned around and closed on a high note on Friday is testament to waning fear of another plunge in the WTI price to an even lower low.

Commodities

West Texas crude was down US$1.48 or 3.9% at US$36.68/bbl on Saturday morning and Brent was down US$1.65 or 4.1% at US$38.68/bbl.

Normally we would see positive results for both Chinese and US manufacturing provide a boost to base metal prices but the LME appears to be suffering from a bout of schizophrenia of late, suggesting price moves are more about metal-specific production and inventory levels than they are about the macro-economic picture.

On Friday night, with the US dollar index as good as steady at 94.58, tin rose 0.5%, aluminium 1%, lead 2% and zinc 3% while copper fell 1% and nickel fell 2%.

Iron ore rose US80c to US$54.00/t.

The solid US data helped gold down US$9.20 to US$1221.90/oz.

The Aussie rose 0.3% to US$0.7684.

With the Thursday-Friday shenanigans out of the way, the SPI Overnight closed up 23 points or 0.5%.

The Week Ahead

That Aussie will no doubt be a focus of attention when the RBA meets tomorrow. A rate cut is not expected but the market will be looking for hints the board might be prepared to act, or at least talk down the currency.

Ahead of the meeting we see local retail sales and building approvals numbers today along with ANZ job ads and the TD Securities inflation gauge. Tomorrow brings the trade numbers and the services PMI and on Thursday it’s the construction PMI.

Service sector PMIs will be posted across the globe on Tuesday, including Caixin’s China number.

In the US it’s factory orders tonight, trade on Tuesday along with the PMI, and chain store sales on Thursday. The minutes of the March Fed meeting will be published on Wednesday but they have already been trumped by Yellen’s speech last week. Yellen speaks again this week, on Thursday.

There’s a late trickle of ex-divs in the local market this week and Bank of Queensland ((BOQ)) will report earnings on Thursday. On Friday, both Dexus Group ((DXS)) and Investa Office ((IOF)) will hold EGMs to vote on the proposed portfolio management takeover.

Rudi will appear on Sky Business on Tuesday, via Skype-link, 11.15am and again twice on Thursday (Trading Day 12.30-2.30pm & Switzer TV between 7-8pm), and via Skype-link at around 11.10am on Friday.
 

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 US non-farm payrolls report for March is due tonight. Given the shift to a more dovish stance from the Fed following first the March policy statement, and more emphatically, this week’s speech from Janet Yellen, the level of vital importance of US jobs reports has waned since, say, this time a year ago.

Beijing will release both China’s March manufacturing and service sector PMIs today. Again, with Beijing expected to step up monetary and/or fiscal stimulus if data continue to be weak, the potential for volatility that once accompanied these releases had faded somewhat.

Australia, Japan, the eurozone, UK and US will release manufacturing PMIs and Caixin will release its independent China manufacturing PMI today.

Next Tuesday sees the same round again for service sector PMIs.

The Fed will be back in the frame next week with the release of the minutes of the March FOMC meeting. The only real point of interest, nevertheless, will be the level of dissention among voting members. Janet Yellen has since superseded the March statement with her speech this week. Yellen will also speak again next Thursday.

US data release next week include factory orders, chain store sales and trade numbers in what is a quieter week economically.

Australia will see ANZ job ads, the TD Securities inflation gauge, building approvals and retail sales numbers on Monday. The RBA will hold a policy meeting on Tuesday. While Glenn Stevens’ recent speech suggests no likelihood of a rate cut, his statement will be interesting in the wake of the reduced possibility of a Fed rate hike anytime soon and the impact that is having on the Aussie dollar.

The round of ex-dividends in the local market all but comes to a close next week. Bank of Queensland ((BOQ)) will report earnings on Thursday.
 

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