Australian jobs, central bank meetings including the Federal Reserve, the Bank of England and the Reserve Bank of NZ, a bit more Brexit, a scattering of corporate results here and in the US and Europe, inflation readings from Japan and Canada later in the week, more Brexit talks and the Bank of England’s interest rate decision – just some of the things the markets will be eyeing this week.
The Federal Reserve meeting will be the first run by new chairman Jay Powell, and its decision in the early hours of Thursday morning (Sydney time) will raise interest rates by 25 basis points to the range 1.50% to 1.75%.
But the real interest from markets is whether the Fed will provide any hints as to the pace of monetary policy tightening for the remainder of the year.
Back in December, the Fed forecast three rate rises for 2018, but a solid run of data and an upbeat assessment of the economy from Mr Powell in late February saw more speculation that a fourth increase this year could be on the cards.
With six more meetings this year after this week’s four rises means one in two of those meeting will have to produce rate rises, which seems a bit much because there is still no sign of inflation turning up and breaking above the central bank’s 2% target (and European inflation is now falling).
The Bank of England will produce its rate decision Thursday night, Sydney time and it seems to be an even money bet if there will be an increase – the UK economy is stumbling along in the midst of a stagflationary mess. Growth is around 1.5%. inflation around 3%.
But economists think there will be no rate rise this time, but perhaps one at the May meeting.
And in NZ, the Reserve Bank of NZ announces its decision early Thursday morning, Sydney time, and will not move rates.
NZ growth slowed at the end of 2017 thanks to the drought (now broken), but households are spending, the housing market is stirring and exports remain solid.
But NZ inflation remains low and there is simply no reason for a rate rise – like Australia where the minutes of the March RBA board meeting will be issued tomorrow. Thursday sees the release of the February Labour force data and unemployment figure – that is tipped to remain around 5.5% or 5.4%, with perhaps 10,000 new jobs created.
House price data from the Australian Bureau of Statistics tomorrow is expected to be roughly flat for the December quarter.
Population data for the September quarter last year is likely to show continued strength with the population continuing to rise around 1.6% year on year, according to the AMP’s chief economist, Dr Shane Oliver.
As well the poor first half figures from embattled department store chain, Myer, are expected later this week (Wednesday perhaps).
But there are also results expected from the linked companies TPG and New Hope (Tuesday and Wednesday) and Brickworks and Washington H Soul Pattinson on Thursday.
Nufarm (Wednesday) is also down to report, along with Sigma Healthcare (Thursday). Most of these companies have January balance dates.
Retailing is in the news following Premier Investments solid first half result (but weak clothing sales, like Myer) and the decision by Wesfarmers to spin off 80% of Coles to its shareholders in the next year.
Back off shore and G20 finance ministers meet in Buenos Aires later today to begin sorting out topics for the leaders meeting later in the year, free trade and protection are likely to be more dominant issues than they were a year ago. Will the G20 take on the US? Treasurer Scott Morrison attends the meeting for Australia.
In Europe, the two-day European Council summit begins on Thursday, with the main topics of discussion expected to be trade and Brexit.
The Financial Times reports that “negotiators are rushing to reach agreement on the transition period for the UK to leave the EU, with the bloc pushing for the period to end in December 2020.”
“The UK is hoping for something a bit longer although it would require extra budget contributions beyond 2020.
Talks are set to continue, but little progress is being made regarding a dispute over the Irish border and the EU and UK are still divided on this subject, according to the FT.
Agreement though could see a rate rise from the Bank of England, but not this week. Jobs and retail sales data for the UK will also be issued this week.
In the US, the Fed meeting holds all the attention and data releases are mostly second tier. There’s existing home sales on Wednesday and new home sales on Friday, the business conditions survey results on Thursday, home prices, also on Thursday and durable goods orders on Friday.
US corporate earnings this week are expected from: Oracle (tonight), FedEx (tomorrow), General Mills (Wednesday) and Nike (on Thursday).
In Asia Japanese CPI inflation for February on Friday is expected to rise to 1.5% year on year, with core inflation also rising to 0.5% yoy, still a long way from the Bank of Japan’s 2% target.
In China further details on home prices will be issued later today – the data will be for January and February.
