A truncated week for most of Australia won’t detract from impact of the most important domestic bit of news – the September employment report on Thursday.
But that will be overshadowed by the increasingly bitter and illogical situation in America where the government spending shutdown triggered by the Republican-dominated lower house of Congress degenerating into a possible US government default later this month.
That’s why events in the US, where the third quarter profit season is about to start will dominate sentiment, despite attempts by some investors to shrug off the situation and ignore its implications.
On top of that the start of the September economic reports from China starts towards the end of the week.
There will be a mixture of quarterly (trade and money supply, inflation, etc) and quarterly (GDP).
In Australia, the ANZ job ads report for September will be released later today, along with the National Australia Bank’s monthly survey of business conditions and confidence.
Jobs ads are expected to be again weak, while economists want to see if the election result has triggered an improvement in business confidence – it won’t have any real impact on conditions.
Tomorrow sees the release of the Melbourne Institute/Westpac Banking Institute survey of consumer sentiment and again analysts will be watching to see if there’s any impact from the change of government on September 7.
Thursday sees the jobs report for September, with no change forecast in the jobless rate of 5.8% and between 5,000 and 20,000 jobs created, which is a bit optimistic considering we have had two months of job losses already – both part and full time.
On the corporate side it’s a quiet week with the Bank of Queensland the only major company reporting – in this case its full 2012-13 results on Thursday.
Annual meetings are starting to arrive though, with linked companies Djerriwarrh Investments and Mirrabooka Investments holding meetings later today in Melbourne.
As well, Transurban, WorleyParsons and Clough are due to hold their shareholding gatherings on Wednesday or Thursday.
And Rio Tinto subsidiary ERA releases its third quarter production and exploration review, also on Thursday, while NAB boss Cameron Clyne is due to address a business function in Melbourne.
In the US, besides the dramas in Washington, the minutes of the last Fed meeting are out early Thursday, our time, and will contain more detail on why the US central bank decided not to start slowing the pace of spending in its current round of quantitative easing.
It’s thought that fears about the situation in Washington with the budget and the approaching debt ceiling helped stay the Fed’s decision to start cutting s its spending. If so, it was a very prescient decision from the US central bank.
With the shutdown curtailing the release of government-compiled data, detail sales, producer prices and the monthly trade account for September will be delayed if the budget brawl is not resolved. The September jobs data was not released last Friday for that reason.
Private data releases include consumer sentiment (from the University of Michigan and Reuters) , which is likely to have been hit by the shutdown brawl.
The pace of the third quarter earnings season increases later in the week with Alcoa, Costo, Family Dollar and Yum Brands followed by major banks J.P. Morgan Chase & Co and Wells Fargo.
Both banks are likely to report lower results, with JP Morgan’s bottom line to be reduced by weaker trading and mortgage results and the impact of several costly settlements of legal action and regulator probes in the quarter.
This quarter is shaping up as one where a lot of companies could report lacklustre results.
Reuters reports that research group FactSet has noted that 90 companies on the S&P 500 Index have already issued negative earnings guidance, which the data company said would be the highest figure since it started tracking guidance data in 2006.
"At the same time, 19 companies have offered positive guidance, which would be the lowest number since FactSet started collecting the data," Reuters reported at the weekend.
And in Washington, as the US government gradually shuts down and the impasse over the debt ceiling takes shape, the annual meetings of the International Monetary Fund and the World Bank will be held late in the week.
As well finance ministers for the Group of 20 countries are meeting in the US capital. Australian Treasurer Joe Hockey will head that group next year.
The meetings will be preceded by expected release of the latest economic forecasts for the world from the IMF tonight, our time, for 2013 and 2014. Expect both bodies to issue dire warnings if the US debt ceiling is not increased.
In Europe there’s a limited amount of data, but Germany, France and Italy are all likely to report a recovery in August industrial production in the week. That will add further support to the belief the eurozone is on a steady, if sluggish recovery trend.
