The markets have a lot to do this week at home and abroad – there is inflation and bank profits that will dominate the week ahead in Australian markets, while overseas there is the trading season. September quarter reports, Covid infections – particularly in the UK and Germany; China’s economy, weaker US economic growth for the three months through September and the start of the big climate conference in Glasgow next Sunday.
Central banks meet in Canada, European Central Bank and Bank of Japan hold meetings – Bank of Canada could raise rates on higher inflation or start cutting quantitative easing.
In addition to Australia, inflation data will also be released for the euro area.
For Australia, Prime Minister Scott Morrison will attend the conference, but the policies and ideas he will adopt remain undecided as the National Party holds the rest of the government hostage.
Rio Tinto showed the weakness of the government and the Nationals last week by pledging to spend $ 10 billion starting next year to halve its operational emissions by 2030. The NSW coalition government has been equally aggressive in revealing its emission reduction plans.
So far, Australia’s business sector has led the way, along with state governments such as the old and new New South Wales administration.
But it will be the September quarter consumer price index on Wednesday that dominates any commentary, especially with the bond market bunnies gossiping because they want interest rates hike before the Reserve Bank. does not see one possible in 2024.
Moody’s economists wrote over the weekend that Australian inflation likely slowed in the September quarter due to the cooling of domestic demand, standing at 2.4% year-on-year, from 3%. 8% in the previous quarter.
Other economists are not so optimistic – the ANZ sees an increase of 0.9% quarter-on-quarter and more than 3% year-on-year. AMP’s Shane Oliver sees an increase of 0.8% quarter-on-quarter and an annual rate of 3.1%.
This would remain unchanged from the 0.8% increase in the June quarter, but down sharply from the 3.8% increase for the year through June.
IHS Markit sees a slowdown to an annual rate of 2.1%.
“The main drivers are expected to be sharp increases in the prices of food, alcohol, clothing and furniture, gasoline prices (up around 6%) and a solid increase in rents, but with the HomeBuilder grant keeping the costs of buying new homes low and the average and median measures of inflation remaining at 0.5% qoq or 1.9% yoy, âsaid Dr Oliver.
“This would only be slightly higher than the RBA’s forecast for core inflation and therefore probably wouldn’t have a significant impact on its forecast,” he said. The Australian result would be very different from the
New Zealand’s third quarter annual rate of 4.9%, the highest since the second quarter of 2011 and above forecast of 4.1%.
Australia’s experience will also be different from other economies like US, UK, Eurozone, Canada, South Korea, Singapore where inflation is rising or staying higher than planned.
In other Australian data this week, Friday’s retail sales figures could show a gain of 1.5% (from 7.7% in August), but a drop of 5.1% in retail sales volumes of the September quarter. Home loans are expected to rise again in September credit data for the Reserve Bank on Friday.
ANZ’s full year results on Thursday dominate the Australian business scene over the coming week, along with Macquarie’s first half figures on Friday.
Quarterly trading updates are also expected from Coles and Woolies, along with September quarter numbers from Fortescue Metals as well as from the country’s largest gold miner, Newcrest.
Chalice Mining’s quarterly tops the list for mining analysts wondering if the company will reveal an early resource for its exciting nickel, copper-PGE discovery at Julimar northeast of Perth.
In the United States, the third-quarter earnings season peaks this week with 46% of S&P 500 companies reporting – with tech majors, big automakers like GM, consumer giants like Coca Cola and McDonald’s, a major broadcaster and social media giants like Facebook and Twitter, as well as Alphabet and oil giants like Exxon Mobil and Chevron (see separate article).
Additionally, the battle for President Biden to push his spending through the US Congress will peak this week. Don’t be surprised if all of this produces a wet firecracker thanks to its own Democrats.
The main data release will be the first reading of GDP growth for the September quarter on Thursday and is expected to slow sharply to an annual rate of 3%, according to AMP’s Shane Oliver after 6.7% in the June quarter.
IHS Markit says the current consensus points to a slowdown to 3.4% from 6.7% in June.
America says other US data expects strong increases in house prices and new home sales and increased consumer confidence (Tuesday), strong underlying orders for goods durable (Wednesday), pending home sales (Thursday), the growth in employment costs for the September quarter to be chosen up slightly and core private final consumption inflation for September on Friday will slow slightly at 0.2% month-on-month, but with annual inflation reaching an annual rate of 3.7%).
Various central bank meetings are expected to leave rates unchanged over the coming week. But Dr Oliver says the Bank of Canada (Wednesday) “should be hawkish in announcing perhaps an end to QE and rate hikes in the first half of next year, but the ECB and BoJ (Thursday) should be accommodating “.
“The ECB will be watched for any guidance it provides on asset purchases after its pandemic bond buying program ends early next year and if it pushes back the rise in bond yields. “said Dr Oliver.
Eurozone GDP for the September quarter (Friday) is expected to grow 2.3% qoq, which is said to be one of the strongest among developing economies and contrasts with weak growth of 0.2% in China. Moody’s economists forecast a 1.8% quarter in the 3rd quarter, down from 2.2% in the second quarter.
Eurozone CPI inflation for October (Friday) is expected to have risen further, reflecting rising gas prices.
Japanese industrial production and employment data are expected on Friday. The Bank of Japan’s decision on interest rates is expected on Wednesday.
South Korea’s third-quarter GDP is released tomorrow and is expected to rise 0.7% quarter-on-quarter.