Corporate earnings, Covid Delta infection rates, US, European and Chinese inflation, bond yields and a slide oil and gold prices will make for another troublesome week for markets which on Friday were in record-setting mode.
US earnings for the June quarter though slow this week with Disney the most important release, Australian earnings accelerate with the Commonwealth Bank on Wednesday the most important to investors.
Delta’s continuing impact in Australia, plus the US, Japan and now China will be on more and more watchlists as well.
In the US the focus will be on inflation on Wednesday with July Consumer Price Inflation for release with investors looking for a slowing. Economists see a headline rate of 0.8%, down from 0.9% in June.
The AMP’s chief economist, Shane Oliver says core CPI inflation is expected to slow to 0.4% month on month for an annual rate of a still high 4.3%, down from 4.5% in June.
The US also sees the latest monthly data on job openings (later today), small business confidence (Tuesday) and producer price inflation (Thursday).The US June quarter earnings reporting season is now nearly 90% done with a 86% of results beating expectations (compared to a norm of 76%); 84% beating on revenue and consensus earnings expectations for the quarter have been revised up from 62% year on year at the start of July to now 85% with upside surprise concentrated in cyclical sectors.
Dr Oliver says that given the rebound in various data “we remain of the view that this could end up near +90%. The strongest earnings growth has been in cyclicals.”
Besides Disney, reports are expected from Barrick Gold, Wendy’s eBay, Baidu, Airbnb, Sonos, Softbank, Coinbase and Chesapeake Energy.
In Australia we have the July business confidence and conditions in the NAB survey tomorrow and consumer confidence in the Westpac/Melbourne Institute survey on Wednesday.
The Australian June half profit reporting season will start to ramp up in the week ahead with 35 major companies due to report including Suncorp and Transurban (today), Computershare (Tuesday), CBA, IAG and Seek (Wednesday), and AGL, AMP, QBE and Telstra (Thursday).
The AMP’s Shane Oliver says “consensus earnings growth expectations are for a 50% rise in earnings for 2020-21 and a 56% rise in dividends. The resources sector is expected to see a doubling in profits followed by 58% growth in bank earnings.
“Outlook statements are likely to be cautious though given the uncertainty posed by recent coronavirus outbreaks and lockdowns.”
After the release of the July trade data on the weekend, today sees the release of China’s Consumer Price Index for last month. Dr Oliver thinks it will likely show a further slowing to 0.8% year on year and producer price inflation is likely to come off its recent highs.
Chinese credit and money supply data is also due for release in the week ahead.
This week will see a series of national CPI releases in the Eurozone, including Germany and France.
