By Craig James

The domestic economic data dries up over the coming week. In Australia the Reserve Bank of Australia (RBA) will dominate the calendar and hopefully provide us with more insight on interest rates with the release of the Board minutes and also a speech by the Reserve Bank Governor. In the US the focus will be on the housing sector. And investors and traders will focus on the “flash” manufacturing data released across the globe (Friday).

On Monday, the Australian Bureau of Statistics (ABS) will recast the industry data on new car sales, converting the original data into seasonally adjusted and trend estimates. The Federal Chamber of Automotive Industries has already reported that 104,512 new cars were sold in March, down 0.5 percent on a year ago. Interestingly we may be seeing a mixed picture on consumer spending but the same cannot be said for sales of sports utility vehicles (or four-wheel drive vehicles). It is clear that demand for SUVs is the main driver of vehicle sales, scaling new heights in March to be up over 8 per cent on a year ago. In fact well over one in three new vehicles sold in Australia is a SUV.

On Tuesday in Australia, the minutes of the April 5 Reserve Bank Board meeting are released – the meeting that decided to leave rates on hold for another month. Investors will be hoping to get a better sense of central bank thinking from the Board minutes – particularly when it comes to the near-term economic and interest rate outlook. The statement following the ‘no change’ decision in early April was mildly more upbeat, with the reduction in global financial market volatility certainly welcomed by policymakers. However the commentary suggested the door would be open for another rate cut if a super-low reading on inflation is published on April 27. We expect the minutes to focus on improving economic conditions, the policy outlook by the US Federal Reserve and the higher Aussie dollar.

In addition the Reserve Bank Governor Stevens will deliver a speech at the Credit Suisse 2016 Global Macro Conference in New York (11:30pm AEST). A title for the speech has not been released, but may focus on comparisons between the US and Australian economy and the drive for productivity in achieving growth targets.

The weekly consumer sentiment reading will be released on the same day (on Tuesday). Confidence levels have fallen for the past four weeks, down by 3.8 per cent. It is pretty clear that the uncertainty surrounding the Federal Budget and timing of the upcoming Federal election is dampening confidence.

On Thursday the NAB quarterly business survey is released alongside the March detailed labour market statistics from the ABS. The industry make-up of employment was released last month, but Thursday’s data will have regional and demographic detail on the job market.

Overseas: US housing sector in focus; “Flash” manufacturing gauges

The flow of Chinese economic data has dried up, so the US takes centre stage in the coming week. And the focus will predominately be on the housing sector. However investors will also keep a close eye on the “flash” manufacturing gauges from across the globe.

The week begins on Monday when the National Association of Home Builders (NAHB) index is released. Presidents of the Minneapolis and Boston Federal Reserve Banks deliver speeches.

On Tuesday, two key indicators on the housing sector will be released – housing starts and building permits. US annualised housing starts are tipped to have eased from a 1.18 million annual rate to 1.16 million in March. New building permits are expected to have edged higher in the month.

On Wednesday, existing home sales data is released and should have remained robust with annualised sales tipped to lift from a 5.08 million annual rate to 5.30 million in March.

On Thursday, the Federal Housing Finance Agency issues its February data on home prices alongside the weekly data on new claims for unemployment insurance, the Philadelphia Fed business index and the leading index for March. Home prices are currently 6 per cent higher over the year.

On Friday, the Markit “flash” readings on manufacturing activity are released in the US as well as Europe and Japan.

Sharemarket, interest rates, currencies & commodities

The US earnings season cranks up a notch in the coming week. And while hopes aren’t high for a good season of profit results, the contrarian view may prove more rewarding. According to FactSet estimates, earnings amongst S&P 500 companies are expected to slump by 8.5 per cent from a year earlier. Meanwhile Thomson Reuters estimates tip a 7.7 per cent slide in first quarter profits. Concerns for analysts and investors centre on the higher US dollar over the past year, low oil prices and the resulting hit to corporate profits, especially in the energy sector. But annual profit growth is tipped to rise over 2016.

 

On Monday, 38 stocks are expected to report including Hasbro, Netflix, and Morgan Stanley. On Tuesday there are another 72 companies listed including Goldman Sachs, Intel, Johnson & Johnson, and Yahoo!. On Wednesday earnings results are expected from 100 companies including American Express, CoreLogic, Mattel, Qualcomm and Coca-Cola. On Thursday 109 companies should issue profit results including KeyCorp, Novartis AG, Under Armour, Visa, and Verizon. And on Friday there are 42 companies listed including Caterpillar, General Electric, Honeywell, Kimberly Clark, and McDonalds.