The Covid-19 (coronavirus) outbreak will continue to dominate markets this coming week as investors attempt to assess whether it is being contained or not and the damage to economies and businesses around the world.
But in Australia as well as the virus’ impact there’s jobs data, wages data and the biggest week of the December reporting season, led by BHP.
Global February business conditions PMIs to be released Friday for the US, Eurozone, Japan, and Asia, as well as Australia will be watched closely in terms of gauging the outbreak’s economic impact.
Up until January, global business conditions PMIs had been recovering nicely from last year’s lows as global growth picked up to 10-month highs (the flash surveys combine manufacturing and service sector activity measures).
In Australia, the minutes from the February Reserve Bank board meeting will be released.
The content has been well canvassed since the meeting a fortnight ago by three public appearances by Governor Phil Lowe and the first of four Statements On Monetary Policy from the RBA which was released earlier this month.
Wages growth (the Wage Price Index for the December quarter is out on Wednesday) is likely to have remained weak in the December quarter and the AMP’s Dr. Shane Oliver says we can expect a 0.5% quarter on quarter gain leaving wages growth stuck at a weak annual rate of 2.2% year.
Jobs data for January (Thursday) is likely to show a slowdown after the stronger than expected gain seen in December – Dr. Oliver says “we expect jobs growth of just 15,000 and the unemployment rate to rise back to 5.2%.” But the key measure will be the annual growth rate for the jobs market.
The Australian December half earnings reporting season will see its busiest week ahead with around 100 major companies due to report this week (See separate story).
The earnings season in the US continues to slow. The US markets will be closed Monday for the annual President’s Day holiday.
Also in the US, housing-related indicators are likely to show continued strength with the latest fall in mortgage rates providing more help for the sector.
Homebuilders’ conditions (on Tuesday) and housing starts (Wednesday) are forecast to weaken but after a big rise in December, but permits to build new homes is forecast to rise.
Manufacturing conditions indexes for the New York and Philadelphia regions will also be released and will give extra guidance as to the economic impact of the Covid-19 outbreak.
The minutes from the Fed’s last meeting are out midweek and are likely to indicate that the Fed remains positive on the outlook for the US economy but aware of the risk posed by Covid-19.
In China data on bank loans and house prices are due for release this week.
In Japan, December quarter GDP (today) is likely to show a sharp 1% contraction reflecting the impact of the sales tax hike in October.
December industrial production data (also due today) is forecast to show a rebound though after a period of post-sales tax-related weakness.