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PREVIOUS ARTICLE ANZACS & the economy NEXT ARTICLE Investor Signposts: Week Beginning May 10 2015

Australia

Tuesday April 28 – Speech by the RBA Governor – Speech to a “Banking & Wealth Summit”

Tuesday April 28 – Weekly consumer confidence – The higher $A has hurt confidence

Thursday April 30 – Export & import prices (March qtr) – Affected by currency, oil, coal and iron ore prices

Thursday April 30 – Private sector credit (March) – Data on lending and money supply

Friday May 1 – Home value index (April) – From CoreLogic RP Data

Friday May 1 – Producer prices (March quarter) – Measures of business inflation

Overseas

Monday April 27 – Markit “Flash” services (April) – Gauge on a major sector of the US economy

Tuesday April 28 – US Consumer confidence (April) – Modest rise in confidence is expected

Tuesday April 28 – US Case Shiller home prices (February) – Annual growth tipped at 4.7%

Tuesday April 28 – US Richmond Fed (April) – Influential regional survey

Wednesday April 29 – US Federal Reserve decision – Will Federal Reserve lift rates in June?

Wednesday April 29 – US Economic growth (March quarter) – Weather-affected reading of 1.1% growth is tipped

Thursday April 30 – US Personal income (March) – Income growth of 0.2% is expected

Thursday April 30 – US Employment costs (March quarter) – Measure of wages and benefits

Friday May 1 – US New vehicle sales (April) – Key spending indicator

Friday May 1 – US ISM manufacturing index (April) – A reading of 52 is tipped

Friday May 1 – China purchasing managers (April) – Cove s services and manufacturing

Few highlights in Australia

– There are few stand-out economic events scheduled in Australia in the coming week. The main event is a speech by the Reserve Bank Governor on Tuesday while data on home prices and some inflation indicators are released.

– Reserve Bank Governor Glenn Stevens will deliver a speech at the Australian Financial Review Banking & Wealth Summit, in Sydney at 8.40am on Tuesday. With inflation data well and truly in the can, he will be in a position to drop hints about interest rates, should he so desire. Arguably this would be preferable rather than using targeted journalists to deliver the message.

– Also on Tuesday, the ANZ/Roy Morgan weekly survey of consumer confidence is issued. Confidence stands at an 8-month low.

– On Thursday, the Australian Bureau of Statistics (ABS) will issue data on export and import prices for the March quarter. On the same day the Reserve Bank releases the “Financial Aggregates” report for March, which includes money supply measures and private sector credit (loans outstanding). We expect that credit rose by around 0.5 per cent in March to be up just over 6 per cent over the year.

– And on Friday, the ABS releases the producer price indexes – key measures of business inflation. It will be important to see whether the lower Aussie dollar is causing prices of imported goods to lift across the docks.

– Also on Friday the ABS releases delayed data on tourist arrivals and departures while CoreLogic RP Data issues latest home price data and the AiGroup issues the Performance of Manufacturing index.

Big week for overseas economic events

– While there is a tame schedule of domestic economic events in the coming week, the same can’t be said for the US. Not only does the Federal Reserve policymaking committee meet but ‘top shelf’ economic data will be issued.

– The week begins on Monday when the Markit organisation releases a “flash” (or early-warning) gauge for the services sector. The Dallas Federal Reserve releases a business index on the manufacturing sector.

– Over Tuesday and Wednesday, the Federal Reserve Open Market Committee meets to decide monetary policy settings. The guessing game on when the Fed will lift rates won’t be resolved. However the text of the decision will be important in determining whether the Fed is on course to lift rates mid-year or whether it is likely to be delayed.

– Also on Tuesday data on consumer confidence is released together with the CaseShiller measure of home prices, influential Richmond Federal Reserve index and weekly chain store sales data. Annual growth of home prices may have edged up to 4.7 per cent while consumer confidence may also have lifted modestly.

– On Wednesday, the first reading (“advance” measure) of economic growth in the March quarter will be issued. Economists expect that gross domestic product (GDP) grew at an annualised rate of just 1.1 per cent in the March quarter, down from 2.2 per cent in the December quarter. But rather than signalling a slowdown, the data highlights the influence of harsh winter weather in constraining growth in the economy. The pending home sales index is also issued on Wednesday.

– On Thursday, data on personal income and consumption (spending) are released in the US as well as the employment cost index, Chicago purchasing managers index and the usual weekly data on claims for unemployment insurance. Income is tipped to lift 0.2 per cent with spending up 0.4 per cent. And the employment cost index will be important in guiding views about when the Federal Reserve will start lifting rates. No wage pressure – no rush to lift rates.

– And on Friday in the US the ISM manufacturing gauge is released together with construction spending, new vehicle sales and consumer sentiment.

– Meanwhile in China, the National Bureau of Statistics will issue both the manufacturing and services purchasing managers indexes for April – key gauges of economic activity in the world’s second largest economy.

Sharemarket, interest rates, currencies & commodities

– The US earnings season hits top gear in the coming week. And it’s a case of so far so good with Thomson Reuters estimating that nearly 76 per cent of S&P 500 companies have reported earnings above analyst expectations, topping the 70 percent average in the last four quarters.

– On Monday, nine stocks from the S&P 500 index are expected to report including Apple. On Tuesday there are another 37 companies listed to report including Ford, Kraft, Merck, Pfizer and United Parcel Service.

– On Wednesday earnings results are expected from another 37 companies including Goodyear, MasterCard, and Time Warner.

– On Thursday 46 companies should issue profit results including Automatic Data Processing, Exxon Mobil, and ConocoPhillips.

– And on Friday there are 10 companies listed including Chevron and Moody’s.

https://youtu.be/FqQgttnsXxs

Craig James, Chief Economist, CommSec

Twitter: @CommSec