Inflation in Australia, US 4th quarter and 2014 economic growth and the vital first meeting for 2015 of the US Federal Reserve will dominate markets here and offshore in this short week (for Australia).
As well there will be more decisions on interest rates from central banks in Russia, Thailand, South Africa and, closer to home, New Zealand.
And besides the US growth figures, early 4th quarter data will be issued in Spain and the UK.
And for Australia, a state election to watch next Saturday when Queenslanders go to the polls.
Inflation in Australia is always important, but the December quarter Consumer Price Index report (a reading of between minus 0.2% and plus 0.3% has been forecast) is one of the most important for a while as it will go some way to setting interest rate expectations for the year.
Besides the CPI data, the week will see the NAB business survey for this month released later today (with no real change in the already weak levels of confidence and conditions expected), trade prices (out on Thursday, which will be weak, reflecting falling prices for iron ore etc), producer prices (which will show the influence of lower oil prices) and credit for December and 2014 (both out on Friday).
As well the local quarterly production reporting season wraps up this week with OZ Minerals producing its December quarter and full year production and sales data tomorrow, and Newcrest Mining releasing its gold and copper figures for the December quarter and half year on Friday.
The copper and gold figures from both companies for 2014 should be solid, as previously revealed. Gold is looking better this year because of the higher prices, but the outlook for copper is weaker because of this month’s price slide.
But the two miners will also get the benefit from sharply lower diesel prices.
Quarterly reports will also come from Panaust and Sandfire Resources release their quarterly figures as well.
But all the attention will be on Thursday’s report from Fortescue Metals Group and whether it will contain any sign of asset write-downs and impairments following the plunge in iron ore prices in 2014.
This report could go a long way to helping solidify Fotrescue’s wobbly share price, or it could raise further questions.
Beach Energy, Paladin and Origin Energy will also report their December quarter figures and their reports.
And Whitehaven Coal is due to release its half year financial report on Friday.
In the US, the Fed (Thursday morning, our time) will reaffirm that it will remain patient in terms of when it will start to raise interest rates and will explain that the timing of any decision will depend on the ongoing economic data this year, as well as factors such as the fall in oil prices and their impact on inflation (and whether these falls are seen as sustainable).
While recent US economic and labour market data has been very positive, of considerable interest will be how the Fed interprets the recent fall in core inflation, and whether this is viewed as a one-off event, with limited medium term impact, or seen as an economic factor with a more sustainable and favourable impact on the US economy.
It is a view that will emerge slowly over the rest of this year and for that reason, many economists think the Fed will be slower to list rates than it seemed after the last meeting in mid December.
The AMP’s Dr Shane Oliver says, “Our base case remains that the first hike will be in June, but with the risk of a delay.” Indeed some US commentators are now seeing a delay until 2016 for any interest rate rise from the Fed".
On the data front in the US, gains are expected in December durable goods orders, new home sales, house prices and consumer confidence (all due tonight, our time) and pending home sales (Thursday night, our time).
The first reading of the December quarter’s GDP (on Friday night) is expected to rise at a solid 3% -3.3% annualised pace (around 0.7%-0.8% quarter on quarter), down from the unusually strong 5% annual rate in the September quarter.
What the GDP data will confirm is that economic growth will enter 2015 in a far stronger position than it did a year ago when the very severe winter caused a sharp slowdown in activity and held back the strength of the recovery for nine months.
Earnings are expected this week from more than a fifth of the 500 S&P companies with the focus on the impact of the big oil price slide which will become clearer with quarterly and full year reports from the likes of giants such as Shell, Chevron and ConocoPhillips due to report (and ExxonMobil and Shell the week after), plus chemical giants such as Dow and Du Pont (which should be big beneficiaries of the slide in input costs).
And tech giants led by Apple, Google, Qualcomm, eBay, Yahoo and Microsoft are due to report. Apple kicks off with its report early Wednesday morning, our time, with investors eager to see if the surge in iPhone 6 sales continued in what is Apple’s first quarter of its financial year.
The companies slated to report include Microsoft, Northrup Gruman, Lockheed Martin, Abbott Labs, Baxter, Pfizer, Eli Lilly, Squibb, Bristol Myers, Proctor and Gamble, Colgate Palmolive, Freeport McMorRan, AT& T (and $US10 billion in write downs), Yahoo, Time Warner Cable, Boeing, Facebook, eBay, Ford, Google Qualcomm, Visa, Mastercard, ConocoPhillips, Shell, Chevron, Amazon, Apple, Whirlpool, Caterpillar, 3M, Peabody Energy, Pfizer, DuPont and Dow Chemical.
Foreign groups reporting in Europe and Asia include Deutsche Bank, Diageo, Nomura, Ericsson, Siemens, BT, Sky, Tokyo Electric, Toshiba, Nokkia, Casio, Honda, Fujitsu, Electrolux, Canon Inc, Samsung Electric, LG Electric (and other companies in both groups), Daihatsu and JAL.
In Europe, the main focus will be on the fallout from Sunday’s Greek election, won by the left wing Syriza party, which wants Greece’s huge $US450 billion debt pile cut or written off and will refuse to impose any more cuts. It could lead to further tensions in the eurozone and a Greek exit and enormous dislocation for the rest of the single currency area and the 18 remaining economies.
Meanwhile, in Europe economic confidence indicators will be watched for further signs of stabilisation (Thursday night ) and the January CPI (Friday night, our time) will show further modest deflation.
Friday also sees the early report on unemployment for the eurozone for December.
Spain produces its first estimates of 4th quarter economic growth – it is expected to be better than earlier in the year as the country’s economy starts a long climb out of recession.
And in Britain the Office for National Statistics publishes its first estimate of 4th quarter GDP growth for the UK.
On Friday The Bank of Russia announces its latest monetary policy decision. That’s after inflation and employment data earlier in the week.
And in Japan, the monthly Japanese economic activity data is expected to show further signs of improvement but inflation is likely to have again slowed, reflecting lower fuel prices (all due Friday morning, our time), and highlighting the lack of any sustained impact of the Bank of Japan’s huge spending program.
On Thursday, The South African Reserve Bank and the Reserve Bank of New Zealand announce their latest interest rate decisions.
