A quieter week this week in Australia and offshore, with earnings reports expected to attract more attention from investors – but watch events in the eurozone connected with Greece’s debt talks starting tonight. Any breakdown could hit market confidence hard.
While the reporting seasons slows in the US, Europe and Asia, here in Australia this week marks the peak with an estimated 60 major companies due to report.
Economic data is not important here, but in the US there’s plenty of figures to analyse, while inflation data will dominate thinking on interest rates in the UK.
But the most important figures will be the mid month surveys of manufacturing activity in the US, Europe and Japan on Friday.
China’s flash PMI publication has been delayed due to the Lunar New Year/Spring Festival holidays, while most American markets will be closed tonight for the Presidents’ Day holiday.
The AMP’s Dr Shane Oliver says the US PMI is likely to remain solid around 53.9 and a further improvement is expected in Europe and Japan.
But Greece will dominate events from tonight, our time, as eurozone finance ministers and officials from the European Commission meet in Brussels to negotiate over Greece’s objections to its debt agreement which expires at the end of the month.
Greece’s new government, led by the anti-bailout Syriza party, is attempting to renegotiate a debt restructuring agreement with its eurozone creditors. It hasn’t made things easier by reneging on previous agreements to cut spending, raise taxes, sack public servants and privatise state owned assets.
That means billions of euros in savings will have vanished as the government wants the rest of Europe to pay the bill – a second or third time.
Elsewhere in Europe, the January inflation data this week will give analysts more clues as to the next movement in UK rates – it will be up, but when is the question now foremost in market thinking.
The Bank of England publishes minutes from its February meeting and unemployment data are also out midweek. Both will also help inform views of the next rate movement.
The European Central Bank’s Governing Council meets midweek, but no interest rate decision is expected.
In the US, the minutes from the last Fed meeting will be released and will confirm the central bank remains comfortable in the way the economy is progressing.
AMP’s chief economist Dr Shane Oliver on the weekend wrote “Meanwhile, the home builders conditions index (tomorrow night, our time) is likely to show a small gain, permits to build to new homes (Wednesday night) are likely to rise but housing starts (also Wednesday night) are likely to have fallen slightly after a very strong gain in December”.
And we can expect the New York and Philadelphia regional manufacturing conditions indices (Tuesday and Thursday nights respectively) and industrial production (Wednesday night) to remain solid and January producer prices (also Wednesday) to show a further fall.
The December quarter earnings reporting season will start to wrap up with retailers dominating. Wal-Mart, the world’s biggest reports, as will department store chain Nordstrom. Hormel Foods (makers of Spam also report), Fossil, Actavis, Marriott Priceline and Deer and Co.
US cable TV group, Discovery Communications, which is in a bid for the Ten Network, reports its 4th quarter performance this week.
A number of small and medium energy groups with interests in US shale oil and gas are due to report this week. Devon Energy is one of the more notable players and its comments and actions on asset values and spending will be widely analysed. Other oil groups reporting include Marathon, Noble Energy, Apache (which is selling assets to Woodside) and Duke Energy.
And quite a few mining companies are set to report in the US and Canada this week, led by gold giants, Newmont, Barrick and Gold Corp. More write downs are expected from Newmont and Barrick, according to some US analysts.
A total of 49 S&P 500 companies are due to report this week from Tuesday onwards.
In Asia, today’s Japanese December quarter GDP data dominates the news flow and is likely to show a return to modest growth after two quarters of recession thanks to the April sales tax hike. Japan’s trade data for January will be released on Thursday. Watch for another improvement in exports and a fall in the cost of energy imports.
In China, house price data are released tomorrow as the country goes into holiday mode for the rest of the week.
In Australia, the minutes from the last RBA Board meeting tomorrow will confirm that the door is open to another interest rate cut down the track, but won’t contain any new insights given the Statement on Monetary Policy and Governor Steven’s parliamentary testimony that post-date the last board meeting.
Statistics include car sales for January from the Bureau of Statistics.
And the December half year and full year reporting season continues this week.
