The week ahead is the first of the big weeks for interim earnings reports in Australia this month.
But we also get an update on retail sales and the latest on the jobs market ahead of the first public appearance for the year by Reserve Bank Governor, Glenn Stevens.
In Australia, the Commonwealth Bank, Cochlear, Rio, Telstra, JB Hi Fi and Boral will lead the reporters, while the National Australia Bank and Macquarie Bank are down to update the market on their performance.
For the NAB it’s the first quarter performance ending December 31, for Macquarie, it’s the nine months and full year update (it balances at the end of March).
Given the amount of bank bashing around, the figures from the Commonwealth will be of special interest when released on Wednesday (and the NAB’s update will add to that interest, especially on interest rate margins and pressures).
The fact that the CBA hasn’t issued any update ahead of Wednesday’s announcement means the result must be fairly average with no great divergence (well no more than 15% up or down).
I think we can depend on the CBA management to strongly defend banking, but to be very circumspect on interest rate commentary given there’s an inquiry into issues like ‘price signalling’ currently being conducted by a parliamentary committee.
The CBA’s dividend performance will also be of interest.
JB Hi-Fi’s interim figures later today will tell us a lot about how the retail sector went in the closing months of 2010.
All retailers have reported trouble meeting sales forecasts (except Coles it seems, from last week’s figures).
JB Hi-Fi indicated at its AGM late last year that sales growth had fallen short of target.
Meanwhile there’s great interest in the size of the profit Rio will produce later in the week (Thursday) for the full 2010 year.
The profitability of its iron ore business will be outstanding, given the strong spot price performance in the last quarter, when its exports from Australia were running at close to capacity.
Higher copper and aluminium prices could also help push earnings well above $US13 billion for the full year, according to some forecasts.
Contract and spot iron ore prices have already risen in 2011, and with coal prices soaring because of the floods in Australia and Indonesia, Rio could end up recouping all the production losses from its Queensland and NSW mines much more quickly than some analysts think.
Rio directors’ comments on the outlook for 2011 therefore will be of considerable interest for the market (especially with BHP Billion producing its interim profit next week).
And while Telstra is expected to produce a lower interim profit, there’s been enough market chat in the past 10 years to suggest that the company will deliver some good news on the way the current $1 billion remake of the company is progressing.
In fact some commentators have claimed that Telstra is picking up new customers at a much faster rate than budgeted for and the cost-cutting is doing better than expected.
Of interest will be the company’s comments on negotiations with the NBN company on buying the Telstra fixed copper wire and associated assets. A broad deal is now tipped to be revealed on Thursday, or soon after.
The tone of the interim (and full year profits) will be very clear; solid to strong profitability from resources and variable earnings from the rest of the market, especially retailing.
Look again for commentary on the impact of the strong Australian dollar.
Boral’s figures will give us a good idea on how the building products sector is faring as commercial and home building remain weak, but resource and infrastructure spending is continuing to strengthen.
Half-yearly results are also due from Cochlear, Bradken and Murchison Metals, while Petsec Energy reveals full-year figures. Austereo, Ansell, AV Jennings, Computershare and Stockland report interim results, while Oz Minerals reveals full-year figures. Interims also come from Alumina, Transurban and Australian Agricultural Co.
STW Communications Group delivers its full-year results, and Newcrest Mining and Gunns end the week with the release of their first-half results. CSR holds its AGM this week and shareholders will be looking to the company to reveal the planned capital management proposals after selling off its sugar and energy business in late 2010.
On Friday RBA Governor Steven’s testimony before a Parliamentary committee on Friday in Canberra will repeat what he said in his post board meeting statement last Tuesday and the first State of Monetary policy for the year on Friday (see above story).
The bank believes current interest rate settings are appropriate, but that it retains a positive view on the medium term growth outlook and still sees inflation rising to the top of its target range, all of which is consistent with more rate hikes this year.
But underlying inflation will not be as strong for much of the year, and growth will be cut by up to half a per cent by the impact of the flooding.
Retail sales today and labour force data on Thursday dominate economic news this week, along with some minor releases such as the ANZ job ads survey which is also out today.
Consumer confidence is out Wednesday.
Economists are looking for a modest rise in retail sales in December, but a fall over the quarter.
Around 15,000 new jobs are forecast to have been created in January (the ABS won’t record people not working because of the impact of the floods).
In the US, it’s a quiet week ahead on the data front with t
