Tag Archives: United States

article 3 months old

The Overnight Report: Each Way Bet

By Greg Peel

The Dow closed down 99 points or 0.6% while the S&P closed flat at 1851 and the Nasdaq gained 0.4%.

Growl

Yes, it’s “official”. When the ASX200 dropped through 4800 early yesterday it was down 20% from last April’s near 6000 peak, and thus we were “officially” in a bear market. No one’s quite sure who these “officials” are, but they tend not to mention the number of times markets drop 20% before turning around and going back up again.

Perhaps it explains why the index proceeded to drop like a stone through the morning to mark another fall well in excess of a hundred points for the second day running, despite there not having been a weak lead from Wall Street as there had been on Tuesday. Sheer panic, it would seem.

Then as the index neared 4700, the buyers finally emerged from their hiding places. The ultimate 56 point drop to 4775 still leaves us amongst the bears, but if this morning’s close in the futures is any indication, we may yet be looking to leave the den.

Yesterday was also a day when some individual stories picked a bad time to emerge. Computershare’s ((CPU)) poorly received result meant info technology (-4.5%) was the worst performing sector on the day, albeit it’s a very small weighting in the index. Hints that Telstra ((TLS)) might be considering moving into electricity retailing saw the telco sector down 3.0%, while news from Woolworths ((WOW)) that you’ll soon be able to pick your groceries up from the train station ensured consumer staples fell 2.1%.

Thereafter, sector moves were more around the 1% mark, with the “outperformers” on the day being utilities, again (flat), and the banks (-0.7%), thanks to post result buying in Commonwealth Bank ((CBA)). Mind you, a 0.7% move down in the financials sector still has a big influence on the index.

A doomsday warning or a capitulation session? It remains to be seen.

Meanwhile, Australian consumer confidence rebounded 4.2% in February to its highest level since November. Go figure. Although the survey was conducted prior to this most recent bout of financial market panic.

Testimonial

Wall Street was poised last night to hear what Janet Yellen had to say to the House Financial Committee. The punters were hoping for confirmation as to whether there will or will not be a March Fed rate hike, without much confidence in such clarity. As it was Yellen provided something for everyone, which simply adds to the confusion.

US jobs growth is strong, the Fed chair noted, and inflation is still expected to reach 2%. But it will get there more slowly than previously assumed. The level of volatility in global markets at present is weighing, and the Fed will not hike rates until things calm down. But the next move is still going to be up, Yellen insisted, not down, as many in the market are beginning to predict.

The take-out is that a March rate hike now seems very unlikely. On that note, the Dow rallied almost two hundred points early in the session. But June still looms large, and that is not good for those hoping for no hikes, or even a cut, or even negative rates, despite June being a long time away.

Throw in another dip in the West Texas crude price and the Dow closed down a hundred. But here, too, we saw some big names with weak individual stories on the night. The broad market S&P500, on the other hand, closed flat. The Nasdaq bounced back 0.5%. So it was a very mixed bag last night, and more of a stock picker’s playing field.

US banks were supported by the news, as I noted yesterday, that Deutsche Bank is looking to buy back its bonds. Deutsche shares rose 6% last night and floated all global big bank boats.

It may be that the dust is about to settle on the European bank collapse story, as such banks actually fail to collapse. The market is clearly haunted by ghosts of 2008. Wall Street, on the other hand, is still very much beholden to the oil story, and it will be some time before oil prices can rebound.

Commodities

Brent crude actually rallied last night, and is up US44c at US$31.22/bbl. But West Texas is down another US67c at US$27.73/bbl and the market fears a breach of the earlier low below 27.

Choppiness continues on the London Metal Exchange. Last night nickel fell 1.7% to close below US$8000/t for the first time since…wait for it…2003. In 2003 the expression “commodities super-cycle” had yet to be coined. Copper fell a percent and zinc rose a percent.

Iron ore fell US20c to US$44.50/t.

Gold remains relatively steady at US$1193.40/oz with the US dollar index down only 0.2% at 95.96. But the Aussie is up 0.7% at US$0.7106.

Today

The SPI Overnight closed up 20 points or 0.4%.

China remains on holiday but Japan also takes a break today.

Janet Yellen’s Congressional testimony moves across to the Senate Banking Committee tonight, but there is unlikely anything new she can add.

Rio Tinto’s ((RIO)) earnings result will prove a highlight today. Other reporters in the crowd include the ASX ((ASX)), Cochlear ((COH)), Mirvac ((MGR)), Suncorp ((SUN)) and Virgin Australia ((VAH)).

Rudi will be on Sky Business twice today. First at noon, for Lunch Money, then again between 7-8pm for his first interview in 2016 by Peter Switzer.
 

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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: Fear And Loathing

By Greg Peel

The Dow closed down 12 points or 0.1% while the S&P lost 0.1% to 1852 and the Nasdaq fell 0.4%.

Bank Bashing

Commonwealth Bank ((CBA)) will release its first half earnings results today. While subsequent headlines will focus on the bank’s profit number, under particular scrutiny will be its capital ratio. The same will be true when ANZ Bank ((ANZ)) and National Bank ((NAB)) provide quarterly updates next week.

Yesterday the Australian financials index, which is completely dominated in market cap by the Big Four banks, fell 4.1%, representing by far the biggest fall of any sector on the session. There has been nothing occurring locally to spark such a trashing – it’s all about a rolling global fear that has its centre in Europe.

The European banks are undercapitalised in relation to new international rules which will require domestic systemically important banks (D-SIB, better known as “too big to fail”) to hold more substantial levels of tier one capital. The market is questioning just how these banks are going to reach their required capital levels when they are carrying significant loans to the energy sector and to emerging markets (China, Russia) while facing negligible to negative interest rates across the continent, even out to ten years.

European bank stocks have been sold down heavily and this has flowed across the Atlantic to US banks, prompting many a call of “overdone” given US banks are very well capitalised and at the D-SIB end of the range, have only minimal exposure to energy sector lending.

Australian banks have been under pressure for a while now but yesterday the rolling fear reached across the Pacific. While better capitalised than they have been for many years, Australian banks still face the prospect of requiring additional tier one capital above and beyond international requirements given they punch above their weight in a much smaller economy. On top of that, higher risk weightings on mortgage lending in order to prevent a housing bubble (although that job by now seems to be done).

The bottom line is Australian banks are a chance to cut dividends and may yet need to raise further capital in the equity market. But we knew that. We knew that last year, and bank share prices have been adjusting ever since. The question is: If Deutsche Bank is sneezing, does it mean CBA must catch pneumonia?

Energy (-3.1%) was the next worst performer yesterday while underwater investors looked to raise cash from selling the two best performing sectors of late, healthcare (-2.6%) and consumer discretionary (-2.5%). The “outperformers” on the day were yet again, in times of trouble, utilities (-1.1%) and telcos (-1.1%).

Despite all that transpired in January (China, oil), Australian businesses have remained mildly confident. NAB’s business confidence index yesterday showed a result of plus 2, unchanged from December, but below the long-run average of plus 5.

Bargain Hunting

Deutche Bank shares were on another slide last night on the German bourse when the bank announced it would look to buy back bonds on issue, which had been trading at around 80 cents in the dollar. This turned around Deutsche’s share price and had the same effect to some extent on US bank stocks.

If Deutsche has the capital capacity to retire debt, one wonders just what the problem is beyond a lack of earnings opportunity. That’s probably while one commentator described Deutsche as “rock solid” last night, in defiance of market panic.

The Deutsche announcement was one driver of what proved a choppy session on Wall Street, featuring several ups and downs including 145 points down on the open and 100 points up in the last hour. Outside of financials, oil was again a focus.

Oil prices had begun the day to the upside when the International Energy Agency issued a report suggesting global demand would slow in 2016 just as Iran re-enters the market as a major producer. West Texas crude subsequently fell 5%. Late in the session US energy company Anadarko announced it would cut its dividend to very little. Anadarko’s announcement follows that of ConocoPhillips last week, but Wall Street has been preparing itself for dividend cuts in the energy sector so there was little surprise.

Outside of both banks and oil, Wall Street was likely looking to square up last night ahead of Janet Yellen’s testimony to the House Financial Committee tonight. There is much disagreement from economists over the Fed’s rate hike plans, with the forecast number of hikes in 2016 ranging from zero to four. As to whether Yellen will throw any light on the subject remains to be seen.

Commodities

West Texas crude is down US$1.53 or 5.1% at US$28.40/bbl. Brent is down US$2.14 or 6.5% at US$30.78/bbl.

The falls in oil defied a weaker US dollar, which is down 0.5% on its index at 96.12.

The LME continues to suffer thin trading and enhanced volatility in the absence of China and thus there were not a lot of buyers around last night when Goldman Sachs decided to cut its base metal price forecasts. Aluminium and nickel fell 1.5% and copper and zinc fell 2.5%.

Iron ore is unchanged at US$44.70/t.

After a solid run, gold stalled last night despite the weaker greenback. It’s down US$3.40 at US$1189.50/oz.

The Aussie has also defied the greenback, aided by yesterday’s stock market rout. It’s down 0.4% at US$0.7057 but traded under 70 during yesterday’s session.

Today

The SPI Overnight closed up 3 points.

Westpac will release its monthly consumer confidence survey today while all eyes will be on Janet Yellen’s testimony tonight.

Earnings season today features results from CBA, as noted, along with AGL ((AGL)), Boral ((BLD)), Carsales.com ((CAR)), Cimic ((CIM)), Computershare ((CPU)) and OZ Minerals ((OZL)).
 

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)

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: Global Banks Under Pressure

By Greg Peel

The Dow closed down 177 points or 1.1% while the S&P lost 1.4% to 1853 and the Nasdaq fell 1.8%.

Stoic

For the second session in a row yesterday, the ASX200 opened sharply lower and traded back to square by the close. The only difference between Friday and yesterday is that the turn came on Friday in the afternoon, while yesterday the opening plunge of 50 points, in line with the overnight futures price, was immediately reversed. By lunchtime we were square.

Bargain hunters continue to find value in the beaten-down miners, with the materials sector up another 1.2% yesterday. Materials were pipped only by utilities which, as was often the case in late 2015, followed up a down-day with a 1.3% rebound. Outside of tiny info tech (-1.3%), the biggest and most influential loser on the day were the banks, down 0.5%.

Weakness in financial stocks has become a common global theme in 2016.

There was some positive economic news yesterday, with ANZ’s job ads series showing a 1.0% increase in January following a slight fall in December. The series is up 10.8% annualised, maintaining a positive trend that began in 2014, corroborating what for many has been surprising strength in Australian employment.

The trend has eased off slightly over the past six months but still suggests the current rate of unemployment will at least remain steady, ANZ suggests.

But back to the banks.

The Mighty Are Falling

European bank stocks were on a flyer late in 2015 on the promise of increased stimulus from the ECB and rising rates in the US. Rising rates are good for banks and thus US banks were similarly sought after when the world assumed the Fed was now on a steady tightening cycle.

But then came the collapse of the Chinese stock market, reflecting a weaker Chinese economy, and the collapse of oil prices. Market commentators, as I have noted here before, have simply got it wrong with regard the positive benefits of lower oil. If only through sheer fear of a global recession, investors world-wide have turned on the banks. They have flooded into fixed interest in Europe, sending short-end rates negative.

This has impacted on European bank stocks, as has risk of energy sector loan defaults and the fact the big European banks have been much slower to restructure and write down assets since the GFC than their US counterparts. They are undertaking that difficult process now, and in the meantime the likes of Deutsche Bank, Credit Suisse and UBS, for example, have seen their stock prices slammed.

No more so than last night, as the German stock index fell 3.3%, led by the banks. The German ten-year yield has fallen to a mere 0.2% while the fives and twos are both negative. The French and UK stock markets suffered similar falls.

And the mood travelled across the pond.

Fightback

Energy is not the worst performing US sector in 2016, the financials are. To a large degree this reflects a reversal of gains made late in 2015 when a Fed tightening cycle was being priced in, but general concern over a global recession has exacerbated falls.

Around 2pm in New York, the Dow was down 400 points. The banks were leading the way but there was also further pain in energy, as the oil price again fell, and further pain in the “momentum” stocks – those high flying new world names of which I spoke yesterday.

Many a commentator has been quick to point out that it is wrong to rope US banks in with European banks and their various problems. US bank balance sheets are currently very strong after significant deleveraging was undertaken post the GFC. Loan quality is much higher than it was before the GFC given a tightening of lending standards. The US banks are sitting on piles of cash and while hampered by a potential stalling in the Fed tightening cycle, are not in any great danger.

Perhaps this difference was enough to spark the bargain hunters into action late in the session on Wall Street, as the Dow rebounded to close down only 177.

There was also a technical element, given the S&P500 last night opened below its strong support level of 1870. This would have immediately triggered technical selling and served to exacerbate early falls.

There is otherwise no denying a flight to safety among those not bold enough to play stock market bargain hunter. The US ten-year yield fell 11 basis points to 1.74%, and is now down 54 basis points in 2016. Gold has been rallying for the past few sessions, and as the US dollar index fell another 0.4% to 96.61 last night, gold is up another US$19.90 at US$1192.90/oz.

Commodities

Beyond gold, there were also some sharp rallies in base metal prices over night. News of heavy rain shutting down tin mines in Indonesia saw that metal jump 3.5%, while warehouse inventory numbers helped lead and zinc to similar gains. Traders were quick to point out that with the Chinese absent, markets are very thin and subject to volatility.

Meanwhile, aluminium, copper and nickel were all relatively steady.

Iron ore is unchanged at US$44.70/t.

The oil markets have begun to concede that any talk of coordinated OPEC and non-OPEC production cuts was just that. And likely a simple ploy to try to push up prices. In the meantime, US production levels are simply not falling. One reason is that costs are falling, implying breakeven earnings levels are now much lower alongside lower prices.

It’s one reason many a marginal US oil producer remains determined to hold on through the price cycle. For many, the cost of turning off a rig and then turning it back on again exceeds the incremental loss on current barrels of production, so it’s worth trying to stick it out. Of course, this strategy is merely self-defeating. Until production falls, oil prices will not rise.

West Texas is down US94c at US$29.93/bbl and Brent is down US$1.09 at US$32.92/bbl.

The Aussie is up 0.2% at US$0.7085.

Today

The SPI Overnight closed down 64 points or 1.3%. Can we see a third successive fightback?

NAB will release its January survey of local business confidence today.

Shopping Centres Australasia ((SCP)) is among a handful of companies reporting earnings today, while ResMed ((RMD)) and Tabcorp ((TAH)) go ex-div.
 

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)

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

Claret Run

Back last century in the days when the ASX actually used to close for lunch for a full hour and a half it was typical for market types to head out to a restaurant on a Friday, polish off a couple of bottles of red, rev each other up, and then come back for the afternoon session intent on buying. It was known as the Friday afternoon “Claret Run”.

If it weren’t for the fact the ASX no longer closes for lunch, and lunching is not as ubiquitous a sport as it once was in the stock market, one might have assumed the ASX200’s sharp turnaround from down 58 points at 2pm on Friday to close almost square was a Claret Run in action. Or in this day and age, perhaps a Shiraz Run.

Or maybe it was triggered by technical trading or simple dip-buying as the index again approached 4900 when it really wants to be at 5000. The big miners, which have fallen a long way, were again heavily sought after, no doubt aided by the week’s rebound in iron ore prices. The materials sector rose 2.9%.

Thereafter it was a very mixed bag among sectors, with the other resource sector – energy – up only 0.8%, the banks down 0.7%, healthcare down again and the week’s most popular trade – utilities – also down by 1.0%.

There may also have been an element of squaring up ahead of Friday night’s US jobs report.

Something for Everyone

Wall Street is currently in “bad is good” mode because the market does not believe the US economy is strong enough to cope with higher interest rates. A weak jobs number on Friday night was thus expected to evoke a positive response from the stock markets, and vice versa.

The result of 151,000 jobs added – missing forecasts of 189,000 and representing only around half of the December number – was therefore a good result. Briefly, Wall Street rallied. But there’s more to a monthly jobs report than just the raw measure of jobs added.

It might have been a low number but when one considers the big jump in December, the average is still strong. Indeed, the three month average of 231,000 jobs added per month is above average and thus potentially no reason to ensure the Fed will not hike again in March. And the unemployment rate fell to 4.9% from 5.0% to mark its lowest level since 2008.

But the number that ultimately startled Wall Street was wages growth. All through 2015, as US jobs growth numbers came in on the positive side, Wall Street expected the Fed to hike rates. A hike was possible in March, more expected in June, and considered baked in in September. But the Fed did not hike until December, and one important reason was a lack of any real wages growth until right at the end of the year.

Wages growth equals inflation. Earlier last week there had been talk that US inflation was running lower than the Fed had anticipated, and this was enough to send Wall Street into rally mode. But US wages suddenly jumped 0.5% in January. Averaging over six months, wages growth is now at its fastest pace since the GFC.

It was this number that spooked Wall Street, and suggested a March Fed rate hike is by no means off the table. There are also two more jobs reports to come before the Fed’s next meeting. Down went US stocks.

And up went the US dollar, by 0.6% on its index to 97.04. Commodity prices were weaker on the threat of more dollar strength to come, and the Dow finished down 211 points or 1.3% and the S&P lost 1.9% to 1880. But the big move was in the Nasdaq, which fell a full 3.3%.

There is little correlation between the tech-heavy Nasdaq index and oil prices, so this particular index has really been playing its own game these past couple of months. And within the index are all those new world, high-flying companies involved in everything from social media to electric cars, which boast PEs at fantasy land levels because it’s all about potential monetisation down the track and not about any E to speak of right at the moment.

On Friday night one of this group – LinkedIn, known as Facebook for grown-ups – posted a quarterly earnings report which fell short of expectation. It was not a shocking miss, but Wall Street sold the stock down 44% just the same. In a case of omigod, the Emperor’s not wearing any clothes, the market decided that maybe the PEs of some of these more esoteric of businesses are just a little over the top.

After Friday night, many are not so over the top any more.

Commodities

The jump in the US dollar on the night, and the implications of what in essence was a “strong” jobs report, was not good news for commodity prices.

West Texas crude fell US80c to US$30.87/bbl and Brent fell US38c to US$34.01/bbl.

In thin trading ahead of the Chinese New Year break, in which metals markets go very quiet, base metal prices tumbled following what had otherwise been a solid week. Copper fell 1.5%, aluminium and lead fell 2%, zinc fell 2.5% and nickel was thumped by 5%. Only tin held its ground.

Iron ore was steady at US$44.70/t and will likely remain so for all of this week.

Gold’s run continued, with the rejuvenated metal rising another US$17.40 to US$1173.00/oz.

And the good news is that the Aussie, which had shot up during the week as the US dollar had tanked, fell 1.8% to US$0.7070 on Saturday morning.

The SPI Overnight closed down 56 points or 1.1% on Saturday morning.

The Week Ahead

Further US data releases are thin on the ground this week until Friday, when retail sales, inventories and consumer sentiment numbers are released.

The highlight, however, will be Fed chair Janet Yellen’s scheduled testimonies to Congressional committees on Wednesday night and Thursday night. While it is likely she will be non-committal, Wall Street will be closely watching for any little hints of dovishness or hawkishness.

China will be closed all week for the New Year holiday. New Zealand is closed today and Japan is closed on Thursday.

RBA governor Glenn Stevens will also provide a parliamentary testimony this week, on Friday, following ANZ job ads today, NAB business confidence tomorrow, Westpac consumer confidence on Wednesday and housing finance numbers on Friday.

The local results season steps up a gear this week. Today’s releases include those from Ansell ((ANN)) and JB Hi-Fi ((JBH)), while throughout the week highlights include AGL, ((AGL)), Commonwealth Bank ((CBA)), Cochlear ((COH)), Rio Tinto ((RIO)) and Suncorp ((SUN)).

Please note the first FNArena Results Season Monitor for this February season was published on Friday and will now be added to each day as the month progresses.

Rudi will appear on Sky Business on Thursday at noon and again on that same day 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

Jobs data are due out in the US tonight. With fears abating of a Fed rate rise in March, and the US dollar falling as a result, one presumes a strong jobs number will be poorly received.

China shuts down all of next week for the Lunar New Year break. Expect metal markets to go quiet. Also expect data distortion out of China for the next couple of months.

New Zealand is also closed on Monday and Japan on Thursday.

US data releases take a breather next week until Friday, when retail sales, inventories and consumer sentiment numbers are due. Janet Yellen will speak on Wednesday night, but is not expected to resolve rate hike speculation.

The first estimate of eurozone December quarter GDP is due on Friday.

In Australia we’ll see ANZ job ads on Monday, NAB business confidence on Tuesday and Westpac consumer confidence on Wednesday.

But the real action locally will come from a ramping up of the earnings result season. Releases are now becoming too numerous to offer highlights, although results from Commonwealth Bank ((CBA)) and Rio Tinto ((RIO)) will draw particular attention.
 

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article 3 months old

The Overnight Report: Reality Bites For Oil

By Greg Peel

The Dow closed up 79 points or 0.5% while the S&P managed only 0.2% with the Nasdaq up 0.1%.

Hope Restored

It does get a bit silly sometimes, doesn’t it? Down a hundred one day and back up a hundred the next. What changed? The oil price went up and the US dollar went down.

The oil price has every chance of going back down again, although in USD terms it will find some support from what now appears to be a greenback set to trade lower as the market abandons the idea of a Fed rate hike in March, or even possibly in 2016. But unfortunately for the Australian market, hopes of an Aussie dollar in the mid-sixties now seem premature at best.

I noted that Wednesday’s sell-off was fairly orderly and relatively uniform across sectors, other than concentrated selling in the resource sectors and not so much selling in genuine yield stocks. Yesterday’s rally was also fairly orderly, but not so uniform across sectors.

The energy and materials sectors both jumped 6.2%. On Wednesday everyone was worried about dividends and yesterday it seemed all was forgiven. It must be noted that valuations for these sectors have fallen so far, their index-weighting impact is nothing like it used to be. Thus yesterday’s 2.2% rally in the banks – another beaten down sector – had greater clout.

If the Fed is now on hold then Australian yield stocks are once again more valuable to offshore investors, assuming the RBA is also on hold for a while. Utilities (+2.5%) were again an outperformer yesterday. But thereafter, other sectors that were sold down on Wednesday did not necessarily pick it all back up yesterday. Indeed, healthcare was down 0.8%, suggesting traders sold the winners to buy the losers, and consumer discretionary was down 0.6%. Outside of your big-name chains, there have been some high flying retailers of late as well to offer up profit-taking opportunities.

One stock that didn’t join in the spoils yesterday was Macquarie Group ((MQG)), which lost 5% after revealing the earnings impact of recent market volatility. Macquarie is nevertheless in exalted company, with Goldman Sachs suffering a similar fate earlier this week in the US and what can only be described as carnage being suffered by European investment banks, with the likes of Deutsche Bank, UBS and Credit Suisse all posting huge losses and write-downs of late.

It appears European banks have been relatively larger lenders to the energy sector than US banks. And as for wealth management, well, everyone has been hit hard there. Everyone saw the US ten-year yield going to 3% (it’s now 1.86%), the US dollar soaring (it’s down 3% just this week), and the US economy picking up (a mere 1.8% for 2015). No one saw thirty dollar oil.

And on the subject of oil…

After rallying 8% on Wednesday night, West Texas crude took off again early in last night’s session, putting on another dollar per barrel. But at that point the dip-buying and short-covering appeared to exhaust itself. As Wile E. Coyote stood there in mid-air, a few feet from the cliff edge, he contemplated Wednesday night’s US crude inventory data, showing more stored oil than ever in history, and the fact data show US production is continuing to rise, not fall. Gravity did the rest.

Another 0.8% drop in the US dollar index to 96.51 was not enough to prevent a mid-session plunge in oil prices, to close down 2% on the day.

US production continues to rise because smaller producers, running cash flow negative, will not turn off the pumps until all hope of a price rebound is lost. Just like Saudi Arabia and Russia, they have to keep pumping oil as fast as possible to at least minimise the cash burn. The irony is, of course, that the oil price will only rebound when enough producers finally bite the bullet.

We’ve seen this happen among Australian nickel producers, but unfortunately Australia alone does not produce enough nickel to make much of a global difference.

And a shudder went through Wall Street last night on the announcement from US energy major ConocoPhillips of a cut in dividend. Though not exactly a shock, it was still a case of reality bites.

Meanwhile, last night’s US data releases showed a 3% fall in productivity over the December quarter – the biggest decline in a couple of years – and a 2.9% fall in factory orders in the month of December.

The Dow was up a hundred points on the oil rally mid-morning, back to flat by midday on the oil turnaround, and up again late in the session on a bump and grind. Weak data, let’s not forget, is good at the moment.

Commodities

West Texas crude is down US66c or 2.0% at US$31.67/bbl and Brent is down US67c or 1.9% at US$34.39/bbl.

Base metal prices continued to rise on the LME last night, quietly, on the ongoing theme of squaring up ahead of Chinese New Year and with some help from the weaker greenback. There were 1% gains across the spectrum except for lead (0.5%) and nickel (0.3%).

Iron ore is up another US70c at US$44.70/t.

Gold’s revival continues on the weaker US dollar. It’s up US$15.20 to US$1155.60/oz.

The Aussie is up another 0.4% at US$0.7200.

Today

The SPI Overnight closed down 14 points or 0.3%.

The RBA will release a quarterly Statement on Monetary Policy today following releases for all-important December retail sales, and the January construction PMI.

Tonight is non-farm payrolls night in the US.

The local earnings season will today feature results from Genworth Mortgage Insurance ((GMA)), News Corp ((NWS)), REA Group ((REA)) and Whitehaven Coal ((WHC)).
 

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article 3 months old

The Overnight Report: Midnight Oil

By Greg Peel

The Dow closed up 183 points or 1.1% while the S&P gained 0.5% as the Nasdaq fell 0.3%.

Hope Abandoned

The carnage was relatively uniform across the local market yesterday and the sell-off was quite orderly. Having opened lower on Wall Street’s influence, the ASX200 just kept sliding away all day to a 2.3% loss.

Weaker oil prices assured the energy sector (-3.9%) was the worst performer as speculation mounts ahead of results season that the likes of Woodside Petroleum ((WPL)) will cut its substantial dividend and that the other gas majors will not be paying dividends ahead that had previously been assumed.

The dividend story extended into the materials sector (-2.8%), where lower iron ore prices and downgraded credit ratings are expected to force the big miners into dividend cuts they have tried so hard not to have to implement. The ongoing rally in the iron ore price this week has been lost in the wash.

The resources sectors received no respite from yesterday’s December trade numbers, which showed a much bigger than expected deficit. It was all down to commodity exports, of course, but once again it’s interesting to note the volume of iron ore and coal being shipped to China is not wavering, just the prices.

There was nowhere much to hide yesterday, although the “outperformers” on the day, being utilities (-0.8%) and telcos (-1.1%) showed that yield is still king when dividend values are not under threat.

With mining in the mire, the RBA appeared pleased this week to note the non-mining sectors of the economy are beginning to carry the can. We’ve seen ongoing expansion in manufacturing but that sector is now tiny compared to the services sector. Yesterday’s services PMI result showed a plunge into steep contraction at 46.3 last month from 48.2 in December.

The major issue is the retail sector, reflected in ongoing rampant discounting. Didn’t do Dick much good. Meanwhile, health again starred as the fastest grower.

I noted on Tuesday that the world’s morbid obsession with a weakening Chinese manufacturing PMI fails to take into consideration the fact Beijing is forcing that sector to contract, while trying to boost the Chinese services sector. Beijing’s official services PMI showed a slight slowing in January but ongoing expansion (51.4), while yesterday Caixin’s independent PMI came in at 52.4, up from 50.2.

On any other day that might have been good news.

Around the Grounds

January service sector PMI results in other major centres included a rise for Japan to 52.4 from 51.5 and a tick up in the UK to 55.6 from 55.4. Losers included the eurozone, which disappointed with a fall to 53.6 from 54.3, and the US, which saw a drop to 53.5 from 55.8.

Rock and Roll

That US services PMI sparked a bit of a straw and camel effect. The US manufacturing result earlier this week had also been disappointing, but the US services sector is much, much bigger. Down went Wall Street, and down went the US dollar. Big time.

ADP’s measure of private sector jobs added in January came in at 205,000, down from December’s 267,000. The US dollar index is currently down 1.6% at 97.29 but had been lower earlier in the session.

The fall in US stocks took the S&P500 down to the technical support level of 1870 in the first hour, and at that point the buyers stepped in. Technical support notwithstanding, it was not lost on Wall Street that the weak data only served to increase the likelihood the Fed will not be raising again in March.

The ensuing rebound was relatively half-hearted until someone pointed up at the screens and said “Look at oil!”. West Texas crude was suddenly screaming upwards.

It was screaming upwards because, yet again, there were murmurs out of Russia about another meeting with OPEC to discuss potential production cuts. The growing belief on Wall Street is that every time WTI slips below US$30/bbl, Vlad starts talking about cutting supply. He has no intention of actually doing so of course, but as last night’s 8% oil price rebound suggests, it’s a ploy that tends to work.

The Dow had been down around 200 points at its low and as trading entered the last hour, was up around 200. A bit of wavering at the end led to a close of up 183.

Commodities

West Texas crude is up US$2.37 or 7.9% at US$32.33 while Brent is up US$2.35 or 7.2% at US$35.06.

Oil prices were also clearly helped by the plunging US dollar, as were commodity prices across the board. LME traders also cited the strong Chinese services PMI (although I’m not really sure how this translates into copper demand) and, again, squaring up ahead of Chinese New Year. All base metals rose 1.5-2.5%.

Iron ore gained another US90c to US$44.00/t.

Gold is up US$12.00 at US$1140.40/lb.

Every silver lining has a cloud. The Aussie is up a whopping 1.8% at US$0.7175 thanks to the greenback.

Today

The SPI Overnight closed up 32 points or 0.7%.

NAB will summarise its December quarter business confidence surveys today while tonight the Bank of England will hold a policy meeting and while nothing new is expected, recent central bank manoeuvres suggest one should not be too certain.

Downer EDI ((DOW)) and Tabcorp ((TAH)) will post earnings results today while Macquarie Group ((MQG)) will provide an update on whether this latest round of global volatility has dented trading profits.

Rudi will appear on Sky Business at noon, Lunch Money.
 

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article 3 months old

The Overnight Report: Don’t Mention the R-Word

By Greg Peel

The Dow closed down 295 points or 1.8% while the S&P lost 1.9% to 1903 and the Nasdaq fell 2.2%.

The Lucky Country

The euphoria generated by the drop in Japan’s cash rate into the negative, representing boosted stimulus, has clearly worn off. Global investors have perhaps realised that while stimulus has seemed like a saving grace since the GFC, one might just want to focus on why the BoJ was forced to take such a drastic measure.

Meanwhile, China continues to slide, particularly if one focuses on manufacturing, the numbers out of Europe have proven disappointing despite beefed up ECB stimulus, and the US growth rate fell to 0.7% from 3.9% over the last six months of 2015.

It’s not a rosy picture. And one would assume that the flow-on of above problems into Australia would prove rather dire, given the important trading partnerships involved. But…

“In Australia,” noted RBA governor Glenn Stevens in his monetary policy statement yesterday, “the available information suggests that the expansion in the non-mining parts of the economy strengthened during 2015 even as the contraction in spending in mining investment continued. Surveys of business conditions moved to above average levels, employment growth picked up and the unemployment rate declined in the second half of the year, even though measured GDP growth was below average. The pace of lending to businesses also picked up.”

That statement was worth over 30 ASX200 points to the downside last yesterday. The market had opened lower but by 2pm was steadying and perhaps looking for a reason to rally. Any hopes of the RBA joining in a monetary race to the bottom in order to further stimulate the Australian economy have been dashed, at least for the time being.

But at least inflation remains low, as the governor noted. Thus there remains “scope for easier policy”, should that become appropriate.

In the market proper it was another tough day for the resource sectors. The overnight plunge in oil prices unsurprisingly sent the energy sector down 3.2%, while any hopes of a positive day for materials thanks to a dollar jump in the iron ore price gave way to the news Standard & Poor’s had downgraded the credit rating of BHP Billiton ((BHP)) and put the company on negative watch.

Oh how the mighty have fallen.

Getting it Wrong

US forecasters made two major calls at the beginning of 2015. One was that lower oil prices will boost consumer spending. The other was that the US ten-year bond yield will run up towards 3% as the Fed begins to raise its cash rate.

US consumer spending remains tepid at best. Last night the US ten-year yield fell 10 basis points to 1.86%. It’s a far cry from the 2.30% seen around the time Fed rate rise speculation was at its peak. Forecasters have underestimated the impact of an oil price that is 70% lower over two years. The impact is not just on oil producer bottom lines but on the many and various industries that service the vast US energy sector, and on the thousands of jobs therein, and, quite simply, on sentiment.

Last night two of the biggest energy names – Exxon and BP – posted earnings result shockers. And announced mass lay-offs. Independently, West Texas crude fell another 5% last night. Global supply cuts? Forget it. And for the second session in a row, the US natural gas price fell 6%.

Those incorrect forecasts have weighed heavily on the US financial sector. Wealth management divisions (and the issue is the same in Australia) are having a very rough time of it. Banks make money when interest rates rise, and late last year investors piled into the US financial sector on the expectation of higher rates, courtesy of the Fed. In 2016 to date, the US financial sector has actually performed worse than the energy sector.

Last night Goldman Sachs also posted a shocker of an earnings result.

Weakness has been exacerbated by selling from sovereign wealth funds across the globe. The funds of oil producing nations, in particular, have been rapidly seeking cash. Even Australia’s Future Fund has shifted to a record level of cash. Such weight of capital is hard to fight against.

The low US bond rate reflects not only a weaker US economy in isolation, but the differentials between major global economies. The benchmark German bond rate is heading south again. Japan’s cash rate is now negative. It’s no wonder Australian economists are assuming the RBA will simply have to cut eventually. But clearly, not soon.

If there is good news, it would be that the liquidation underway will be finite and take global stocks down to levels of greater perceived value. In other words, the dip-buyers will be on the lookout. In the meantime, talk of a global recession is growing in popularity on Wall Street.

Commodities

West Texas crude is down US$1.47 or 4.7% at US$29.96/bbl. Brent is down US$1.433 or 3.9% at US$32.71/bbl.

LME movements continue to be mixed ahead of the Chinese New Year break. Last night aluminium, copper, nickel and tin were down 0.5-1.5% while lead and zinc rose 0.5-1.0%.

[Did you watch Catalyst on the ABC last night? Zinc might be an interesting call for the future.]

Iron was higher once more, up US60c to US$43.10/t. Again, we need to take the New Year effect into account before getting too excited.

Gold is steady at US$1128.40/oz with the US dollar index down 0.2% at 98.82.

The interesting move over the past 24 hours has been in the Aussie. One would assume Glenn Stevens’ rather hawkish monetary policy statement would have sent the Aussie higher on the assumption any rate cut is a while off. Indeed, the Aussie did spike up at 2.30pm yesterday, but only for a blink. It then proceeded to fall sharply and is now down 0.8% at US$0.7049.

Perhaps the forex market has focused on “…new information should allow the board to judge…whether the recent financial turbulence portends weaker global and domestic demand. Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand”, in the last paragraph of yesterday’s statement.

Perhaps the forex market is saying “Yes it will”.

Today

The SPI Overnight closed down 68 points or 1.4%.

It’s service sector PMI day across the globe today, including Caixin’s read on China’s number.

Australia will also see building approvals and trade numbers.

In the US, the ADP private sector jobs report will be closely watched ahead of Friday’s non-farm payrolls release.

Rudi will make his first appearance for the year on Sky Business tonight, hosting Your Money, Your Call Equities, 8-9.30pm. He's bringing along a special guest.
 

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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: Fedspeak Follies

By Greg Peel

The Dow closed down 17 points or 0.1% while the S&P was steady at 1939 and the Nasdaq rose 0.1%.

Looking North

The local market jumped on the BoJ bandwagon from the open yesterday in concert with global markets on Friday night. A 20 basis point cut to the Japanese cash rate to minus 0.1% from plus 0.1% is apparently the stuff of global recovery. The ASX200 was up 68 points at its high.

Whether or not anyone noticed, TD Securities’ monthly inflation gauge released yesterday showed a 0.4% increase at the headline in January to 2.3% annual, despite the plunge in USD oil prices. Core inflation, ex-energy, showed a 0.2% gain to 2.0%. The market remains convinced the RBA will be forced to cut its cash rate again some time later this year, if for no other reason than everyone else, bar the US, is doing it, but on these numbers there’s clearly no rush.

Nor would the state of Australia’s once destitute manufacturing sector provide cause for the RBA to panic. Yesterday’s local manufacturing PMI came in at 51.5. That’s down from 51.9 in December, but represents the seventh month of expansion nonetheless.

But for global markets there’s only one PMI that matters, and that’s China’s. Beijing’s official manufacturing PMI showed a fall to 49.4 from 49.7 to its lowest level in three and a half years. This was sensational news, apparently. At least, it was if you were watching TV news broadcasts last night.

What isn’t sensational news for the popular press – probably because it all starts to get a bit complicated for the great unwashed – is that Beijing’s services PMI came in at 51.4. That’s down from 52.2, so there’s no denying China’s economy is still in slowing mode. But a major reason China’s economy is slowing is because Beijing is trying to transition China from a workshop-to-the-world to a domestic-based consumer of goods and services. To do this, one assumes the Chinese manufacturing sector would need to contract.

The Chinese PMI results took the ASX200’s gain yesterday down to 38 points at the close, from the 68 point peak.

And as an aside, Caixin’s independent measure of Chinese manufacturing PMI came in at 48.2. That’s a faster rate of contraction than the official measure, but actually up from 48.0.

In the wash-up, sector moves for the local market yesterday were relatively uniform with the exception of healthcare. The hospital stocks were down on Friday and bounced back yesterday, sending the sector up 2.8%.

Around the Grounds

Japan’s manufacturing PMI fell to 52.3 from 52.6, but that’s pre rate cut, while the eurozone was disappointing with a fall to 52.3 from 53.2 post the ECB’s stimulus kicker announced in December. The UK was pleasantly surprised with a better than expected 52.9, up from 52.1

Each of the above economies, and Australia, are at least seeing their manufacturing sectors expand. The US result showed improvement, but only to 48.2 from 48.0. The result represents the fourth consecutive month of sector contraction.

Love That Bad News

Which is one reason to assume the Fed will be in no rush to implement its second rate cut in March. Another reason was provided by last night’s release of US personal income and spending numbers.

Consumer spending in December was flat on November, despite incomes rising 0.3%. Savings have reached a three-year high. The personal consumption and expenditure (PCE) measure of inflation fell 0.1% in December to mark 0.6% growth for 2015. The Fed prefers PCE to CPI, and this is the number the FOMC wants to see at 2%.

US inflation has clearly become an issue for Fed vice chairman Stanley Fischer. Fischer was last year among the most hawkish of FOMC members, deriding the market at the time for assuming too slow a pace of Fed rate hikes in 2016. Last night he changed his tune, and admitted the market might be right. Global volatility is weighing on the US economy, and that is slowing the pace of inflation growth from previously assumed levels.

The Dow has opened down 167 points from the bell and was continuing to struggle when Fischer made his comments. By late afternoon the Dow was up 44, before settling down 17.

The initial fall was driven by yet another 6% plunge in the price of oil, which in turn was driven by the awesome power of the Chinese manufacturing PMI. And presumably the market is beginning to concede that co-ordinated OPEC/non-OPEC production cuts are the stuff of fantasy.

But between the data, and Fischer’s interpretation of that data, the outlook for the US economy is clearly weak. And that’s great news.

Meanwhile, despite Snowzilla attacking last month, the forecast in the US is now for a period of winter mildness, unlike the past two winters. Good news? Well not for US natural gas, which fell 6% last night. Kick ‘em when they’re down.

Commodities

West Texas crude is down US$2.13 or 6.4% at US$31.43/bbl while Brent is down US$1.95 or 5.4% at US$34.04/bbl.

Activity on the LME was mixed last night, and once again we are reminded that China shuts down for the New Year break next week and that means a late scramble to buy or sell material and to square up trading positions. So we saw aluminium and copper steady, nickel down 1.5%, lead up 1.5% and tin up 2%.

Iron ore jumped US$1.00 to US$42.50/t. This is likely to set the mining sector on fire today and spark talk of a comeback, but I’d be wary of the aforementioned holiday and its implications.

Weak data and Fedspeak has the US dollar index off 0.6% to 98.99 and gold up US$11.30 to US$1128.30/oz.

The weakness in the greenback has countered any China-related weakness in the Aussie, which is up 0.4% at US$0.7106.

Today

The SPI Overnight closed down one point.

The RBA will meet today and leave its cash rate on hold.

Navitas ((NVT)) will post its earnings result.
 

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article 3 months old

The Monday Report

By Greg Peel

Ground Zero

It was a stuttering session on Bridge Street on Friday as the local market struggled to establish any direction on the last trading day of what had been a disappointing month. One sector at least knew which way it was headed, with a 5% gain in energy off the back of the oil price rebound being the stand-out on the day.

There was some counterbalance from selling in the big hospital names, leading healthcare down 1.8%, but otherwise it looked like a weak monthly close at midday when the ASX200 was down 30 points. Then along came the Bank of Japan.

Having only a week ago assured markets there would be no dramatic move in monetary policy, the Bank of Japan shocked markets on Friday afternoon by dropping its cash rate to minus 0.1% from plus 0.1%. As Japanese banks will now have to pay 0.1% to park their money with the central bank, the move has been implemented to encourage lending into the economy instead. As to whether this is the magic bullet needed to get Abenomics back on the rails, well there’s not a lot of optimism across the globe.

But the move was certainly well received by stock markets. The Japanese Nikkei index jumped 2.8% to its close but beforehand the Australian market found the kicker it needed to carry the ASX200 back over the 5000 mark to close the month, as I had suggested on Friday morning would be the goal of fund managers in the session. The 5000 level is certainly ground zero for the local market – a centre of gravity so powerful we have ultimately returned to it every time there is any move above or below over the past 12 months.

All the Way with the BoJ

The BoJ rate cut also gave UK and European markets a shot in the arm, and that mood lost nothing as it crossed the pond to Wall Street. Underpinned by the week’s rebound in oil prices, the US markets took the Japanese rate cut as a major positive at a time the December Fed rate hike has been causing much consternation.

The Dow closed up 396 points or 2.5%, the S&P gained 2.5% to 1940 and the Nasdaq rose 2.4%.

Talk persists of Russia and Saudi Arabia agreeing to 5% oil production cuts. There are various reasons why the world is sceptical of this possibility, not least of which being a long history of failed co-operation between the two producing nations. But most importantly, it is the US which is creating global oil oversupply. With oil at US$30 a barrel, non-US oil producers have the best chance of affecting global supply reduction if, having come this far, they can just sit it out a bit longer and wait for a slew of underwater US producers to go to the wall.

If production cuts are implemented outside the US, pushing oil back to 40 or maybe even 50, then marginal US producers will hang in there and the problem will not have been solved. Oil would likely then go back down towards 20 again.

Oil prices stabilised on Friday night but there is no doubting the week’s rebound, to end a still woeful month, has given Wall Street some renewed hope amongst Fed rate rise fear and what is proving yet another disappointing US corporate earnings season. Energy sector losses have made net earnings look woeful but that aside, once again revenue growth across the US economy is sadly absent.

On the subject of Fed policy, Friday night’s first estimate of US December quarter GDP came in right on expectation at 0.7% growth. That’s down from 2.0% in the September quarter and 3.9% in June. The result might have met expectation, but on the basis of this trend, how could one see a central bank continuing on a steady tightening path? And for the third year running, snow is threatening to be a factor in the March quarter.

The GDP result was thus another outside factor in Wall Street’s rally on Friday night. It is hard to see the Fed raising in March. The BoJ has gone the other way, and oil has stopped falling. For now.

Commodities

West Texas crude was almost unchanged over 24 hours on Saturday morning at US$33.56/bbl. Brent was up US71c at US$34.74/bbl.

The BoJ’s move unsurprisingly sparked a big plunge in the yen and subsequently the US dollar index jumped 1% on Friday night to 99.58. This should have been bad news for commodity prices, but over in London, base metal traders were more heartened during the weak by the oil price rebound.

We are also now only a week away from that annual event that always has the capacity to throw commodity markets into a bit of a turmoil. Chinese New Year comes very early in 2016, beginning next week. There is always a scramble ahead of the break, which pushes prices up, deathly quiet during the week, and sell-off afterwards as life slowly returns to normal. The holiday also distorts Chinese data over the period which often causes distress.

You’d think we’d be used to it by now.

Copper rose 0.6% on Friday night but short-coverers sent zinc up 2.5%, lead up 3% and tin up 4.5%.

Iron ore was unchanged at US$41.50/t.

Gold was also little changed despite the big dollar jump, at US$1116.90/oz.

And the big rise in the greenback did not impact on the Aussie, which is steady at US$0.7080, given the counterbalance of a lower yen through the cross-rates.

The SPI Overnight closed up 37 points or 0.8% on Saturday morning.

The Week Ahead

Today is the first of February and that means two things: the first of the month brings the global round of manufacturing PMI releases; and we have now entered the local corporate earnings result season.

In China’s case, Beijing will release both the official manufacturing and services PMIs today. As we know from last month, these releases have the capacity to send the Chinese stock market into apoplexy.

For the US, it’s jobs week. I would suggest we’re probably now back into a “good news is bad news” setting on Wall Street, such that a better than expected non-farm payrolls result this coming Friday night will send US stocks south on Fed rate rise fears.

Before we get to that result, the US will see personal income & spending tonight, vehicle sales on Tuesday, private sector jobs on Wednesday, and factory orders, productivity and chain store sales on Thursday.

The Bank of England will hold a policy meeting on Thursday. What surprises might it come up with?

The RBA will meet tomorrow. No surprises are expected downunder. The RBA will also release a quarterly Statement on Monetary Policy on Friday.

Australia’ manufacturing PMI is out today, along with monthly house prices and the TD Securities inflation gauge. The services PMI is due on Wednesday and construction on Friday. We’ll also see building approvals and the trade balance on Wednesday and retail sales on Friday.

The first week of the results season proper will start slowly as always. Navitas ((NVT)) will report tomorrow, a small group will report on Thursday including News Corp ((NWS)) and Tabcorp ((TAH)), and Friday sees REA Group ((REA)) along with a couple of others.

Macquarie Group ((MQG)) will provide a trading update on Thursday.

Rudi will make his first appearance in 2016 on Sky Business as host on Wednesday, YMYC, 8.00-9.30pm and re-appear as guest on Thursday at noon.
 

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