The Week Ahead

The inflation gauge and consumer confidence index will dominate local news, while Chinese economic data will be of interest to investors abroad.

Focus on state economies and inflation

There is a spattering of new economic data and surveys to digest in the coming week.

The week kicks off Monday with release of the CommSec State of the States’ economic performance survey. The report covers eight indicators including retail spending, unemployment and economic growth.

In terms of economic data, due for release on Monday is the latest inflation gauge from TD Securities and the Melbourne Institute. The key question is how low can inflation go?

Also due on Monday are the December figures on new car sales from the Bureau of Statistics. The industry data has already been released and the ABS data will merely recast the figures in seasonally adjusted and trend terms. The industry data showed that sales in December were a record for any December month.

On Tuesday, the ABS releases December figures on the imports of goods. The data is one of the timeliest measures of economy-wide spending.

Also on Tuesday, Roy Morgan and ANZ release the weekly consumer confidence index. Confidence is just OK at present, but despite that consumers are still spending freely. The good news for retailers is that the latest estimate on whether it was a good time to buy a major household item was at 5-month highs.

On Wednesday, the weekly consumer confidence figures will face some validation from the monthly consumer confidence reading complied by Westpac and the Melbourne Institute. The value of this survey now is in the questions posed quarterly on the wisest place to put new savings.

And on Thursday there are two indicators to watch. The first is the detailed job market data for December. This report includes results such as unemployment by region and estimates on employment trends for demographic groups.

The second indicator is the new home sales figures for November from the Housing Industry Association. For the past seven months, home sales have been travelling sideways in a zig-zag fashion.

Overseas: Chinese economic data takes centre-stage

With only largely ‘second-tier’ readings expected in the US, investors will spend more time concentrating on Chinese economic data. Still, the International Monetary Fund release economic forecasts on Tuesday.

The week begins on Sunday when data on Chinese home prices for December are expected. Currently house prices are 3.7 per cent down over the year.

On Tuesday, Chinese economic growth figures for the December quarter -- and for 2014 as a whole -- will be released. The economy is probably growing at a 7.2 per cent annual pace. On the same day the usual monthly activity readings are expected, covering retail sales, production and investment.

On Tuesday in the US, the National Association of Home Builders index is expected to show a modest gain.

On Wednesday, housing starts data is due in the US with annualised starts tipped to lift from 1.028 million to 1.04 million in December. New building permits are also expected to have edged higher in the month. The usual weekly data on mortgage finance is also released.

On Thursday in the US, the Federal Housing Finance Agency issues its November data on home prices. Home prices are currently 4.5 per cent higher over the year. The Markit “flash” readings on manufacturing activity are released in the US as well as Europe and China. And the usual data on claims for unemployment insurance is issued in the US.

And on Friday, there are two indicators that bear watching: existing home sales and the leading index. Existing home sales are expected to have lifted from a 4.93 million annual pace to 5.05 million in December. Meanwhile, the leading index may have lifted 0.4 per cent in December.

Sharemarket, interest rates, currencies & commodities

The US earnings season has begun: the time when companies report their quarterly profits or earnings. In October last year, the consensus estimates compiled by S&P Capital IQ suggested that fourth quarter earnings (December quarter earnings) would be up 11.5 per cent on a year ago. Currently analysts believe that annual growth will be closer to 4.6 per cent. While expectations have been pared across the board, substantial downgrades have been issued for the Energy and Materials sectors.

Among companies scheduled to report on Tuesday are IBM, Baker Hughes, Halliburton and Morgan Stanley.

On Wednesday earnings are expected from American Express, eBay and US Bancorp.

On Thursday, profit results are slated from E*TRADE, Altera, Starbucks and Verizon Communications.

And on Friday, General Electric, Bank of New York Mellon, State Street and Kimberly Clark are amongst those expected to report earnings data.

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