By Craig James

Business and consumer confidence focus 

In Australia, the week kicks off on Monday when the Reserve Bank releases May data on credit and debit card lending. Consumers are using credit cards more often but paying off outstanding balances by the due date. Also on
Monday broader lending finance data – covering personal, business, housing and lease loans – is released.

On Tuesday, the NAB business survey for June is released. Business confidence is holding at a nine-month high supported by the Federal Budget policies to drive business activity. Of interest will be the demand for new borrowings. In May, the proportion of firms reporting that they did not require credit fell from 72% in April to 50%. More borrowing should essentially lead to more investment and a lift in broader economy activity in coming months.

On Wednesday, the Westpac/Melbourne Institute monthly measure of consumer sentiment is released – a survey that provides a useful check on the similar and timelier Roy Morgan weekly survey (released on Tuesday). The ongoing global concerns surrounding a potential Greek exit from the Euro zone, and the rout in Chinese sharemarkets is likely to dampen sentiment. Also the ABS will release figures on dwelling commencements for the March quarter.

Also on Wednesday the Bureau of Statistics (ABS) recasts 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 a record 125,850 new cars were sold in June, up 6.4% 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 June to be up almost 15% on a year ago. In fact just over one in three new vehicles sold in Australia is a SUV.

Overseas: Chinese economic data takes centre-stage 

The week begins on Monday when June data on Chinese trade is released. A trade surplus of US$55 billion is expected, largely due to the anticipated pullback in imports (-16.0% in June).

On Tuesday in the US, May figures on retail sales are issued together with the data on business inventories. Economists expect that sales lifted by 0.3% in June after a 1.2% lift in May. Excluding autos, sales may have lifted by 0.6%.

On Wednesday, the Federal Reserve Beige Book is released alongside the Empire State manufacturing survey, industrial production figures and the producer price index (PPI). Probably the most influential is the Beige Book – a summary of conditions across 12 Federal Reserve districts. The report will be a key input to the decisions made by Federal Reserve policymakers at their next meeting. Business inflation should remain contained with a lift of 0.3% expected for June. Better results for manufacturing and industrial production are expected.

In China, on Wednesday economic growth (GDP) figures for the June quarter will be released. The economy is probably growing at a 6.8% annual pace. On the same day China’s National Bureau of Statistics issues the usual monthly activity readings, covering retail sales, production and investment.

On Thursday in the US, the National Association of Home Builders (NAHB) index is released alongside the Philadelphia Fed Business outlook. The usual weekly data on claims for unemployment insurance is also released

And on Friday in the US, consumer prices, housing starts, building permits and the preliminary reading on consumer confidence for July will be released. US housing starts are tipped to lift from 1.04 million to 1.1 million in June. New building permits are expected to have fallen by around 12% in the month.

The core reading of consumer prices (excludes food and energy) is tipped to have lifted just 0.2% in June to be up 1.7% over the year - giving the Federal Reserve ample time before needing to commit to the first rate hike. 

Sharemarket, interest rates, currencies and commodities

The US earnings season cranks up a notch in the coming week. According to FactSet, across the S&P 500 index, earnings are expected to fall 4.5% in the second quarter – marking the first drop since the third quarter 2012. Interestingly when the energy sector is excluded, earnings are forecast to have lifted by 2.2%.

And while hopes aren’t high for a good season of profit results, the contrarian view may prove more rewarding. Analysts issued similar downbeat predictions ahead of first-quarter earnings, as well, forecasting a 4.9% decline in S&P 500 earnings. In the end, profits grew by 0.8% and by an even better 8.6% excluding the energy sector.

On Tuesday, six companies are expected to report including Johnson & Johnson, JP Morgan Chase, Wells Fargo, and Yum! Brands. On Wednesday there are another eight companies listed including Bank of America, Intel, Netflix, and Delta Airlines. On Thursday, earnings results are expected from 13 companies including Citigroup, eBay, and Goldman Sachs. And on Friday there are six companies listed including General Electric and Honeywell International.