Markets

AUSTRALIAN DIARY: Everything you need to know about the week ahead for markets

There’s a full schedule of key data releases this week to kick off a new month.

After Australian markets closed following heavy selling on the ASX200, preliminary data for US Q2 GDP came in at 2.6% – just shy of the consensus Bloomberg forecast of 2.7%.

The figures represented an increase from the Q1 slowdown, with final Q1 figures revised down to 1.2%. Gains in Q2 were driven by stronger consumer spending, while business spending also rose but housing investment dropped.

The net result was that markets remain unconvinced about a pickup in growth, and more importantly inflation, in the US economy.

That meant the US dollar once again came under pressure, with the AUD closing higher at 0.7986 while the euro pushed back above $US1.17 to its highest level since January 2015.

Stocks in the US traded flat, although there were some jitters in the tech-focused NASDAQ index which fell by 1.3% over the last two days of the week.

Renewed strength in the euro dimmed sentiment in European markets, with the composite Euro STOXX600 index down more than 1%.

Australia

The start of a new month means PMI figures will be released across the week both domestically and abroad.

Key data in Australia this week will be led by the Reserve Bank of Australia, kicking off on Monday with private sector credit growth in June. The market forecast is for a 0.4% rise in June following a 0.2% gain in May, with the effect of recent macro-prudential regulations putting a cap on credit expansion.

Then on Tuesday at 2:30pm AEST, the RBA will make its monthly interest rate announcement.

With the official cash rate almost certain to stay on hold at 1.5%, the accompanying statement is likely to reflect last week’s speech from RBA Governor Philip Lowe, where he said that rates are likely to stay on hold for an extended period.

On Friday at 11:30am, the RBA will also release its quarterly Statement on Monetary Policy (SoMP), which provides a summary of the bank’s two-year forecast for economic growth.

ANZ economists David Plank and Felicity Emmett expect the bank to maintain a cautiously optimistic tone, with a slight downward revision to GDP compared to May, given a weaker Q1 GDP print and the higher Aussie dollar. Here’s the table from the May statement:

Also keep an eye out for data from the Australian Bureau of Statistics this week. On Wednesday at 11:30am AEST there’s new building approvals data for June, expected to increase slightly after falling in May.

On Thursday at 11:30am AEST the ABS has international trade balance data for June. The market is forecasting a fall of around $0.6 billion from the May surplus of $2.5 billion due to lower export revenue.

To cap off a big week domestically, along with the RBA’s SoMP on Friday, there’s also retail sales data for June. The market is forecasting a 0.1% rise following two straight months of surprisingly strong data.

While April and May may have benefited from households restocking following east coast storms in March, ANZ’s Jo Masters forecast solid growth of 1.3% across the quarter due to positive indicators in the broader economy.

“Over the quarter, consumer confidence improved, NAB business conditions for retail rose, fuel prices fell and auction clearance rates stabilised at still elevated levels,” Masters said.

Here’s the table of data releases scheduled for this week (via Commsec):

International

Looking abroad, the big data releases with potential to move markets kick off in Europe on Monday night with the release CPI inflation data for the Eurozone, with the market forecasting a rise of 1.1%.

Europe follows up with GDP figures on Tuesday night for the June quarter, with the consensus forecast of a 0.6% rise.

Also on Tuesday in the US there’s the Personal Consumption Expenditure (PCE) inflation index, which is a measure of inflation closely watched by the US Federal Reserve. The market forecast is for the core PCE index to climb by 1.4%.

On Thursday night in the UK, the Bank of England has its interest rate announcement, with no change expected to the current rate of 0.25%.

Then on Friday after markets close for the week in Australia, the US has the all important employment report. The consensus forecast is for 180,000 jobs to be added, sending the unemployment rate slightly lower to 4.3%.

The main focus will be on wages given that higher wages are a key driver of inflation. According to Bloomberg, hourly wage growth is forecast at 0.3% for the month and 2.5% year-on-year.

Canada also has its employment report on Friday, with the recent pickup in Canada’s economy expected to filter through into stronger jobs growth for June.

Here’s the international calendar for this week (via Commsec):

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