By Craig James

In Australia, the week kicks off with the latest CommBank Business Sales index – a measure of economy-wide spending - on Monday.

On Tuesday the ANZ/Roy Morgan weekly consumer sentiment survey is released. Sentiment levels have softened in the past fortnight although that should hardly be a surprise. Currency, commodity and share markets have proved volatile and that has affected consumer sentiment – not just in Australia, but across the globe. In addition, the Aussie dollar has slumped, causing consumers to worry about the higher cost of overseas travel and dearer imported goods. 

Still, the survey to be released on Tuesday will be the first gauge of consumer feelings following the election of Prime Minister Turnbull. 

Also on Tuesday the Australian Bureau of Statistics (ABS) issues data on home prices – the “Residential Property Price Indexes” publication for the June quarter. Not only are the figures somewhat dated, but the CoreLogic RP Data figures are more comprehensive. 

On Thursday, the ABS releases the latest population figures – the publication “Australian Demographic Statistics” for March 2015. Annual population growth has slowed to a three and a half year low of 1.42%, reducing the speed limit of the economy and sustainable investment returns. 

Also on Thursday, the ABS releases the Finance and Wealth publication for the June quarter. This publication includes an array of statistics including the foreign holdings of bonds and shares, household wealth and the financial asset composition of pension funds. 

Overseas: US housing in focus

In the US, the week kicks off on Monday with data on existing home sales. Economists expect that home sales eased by around 1.5% in the month. 

On Tuesday, data on home prices for July is released. In June prices rose modestly, up just 0.2% to stand 5.6% higher than a year ago. So demand for homes is solid, but not excessive. Also on Tuesday weekly data on chain store sales is released together with the influential Richmond Federal Reserve survey. 

On Wednesday the so-called “flash” manufacturing gauges are released in the US, Europe and China. While the survey methodology and results are doubtful, unfortunately they are watched by a number of analysts and investors. The Chinese results will be especially scrutinised.

Also in the US, the usual weekly data on housing lending is released on Wednesday. 

On Thursday the US Federal Reserve chair, Janet Yellen, delivers a speech while weekly data on claims for
unemployment insurance is issued together with new home sales and durable goods orders. 

Economists expect that new home sales may have lifted by around 1.6% in August but also forecast that a key measure of business spending – orders for durable, or long-lasting, goods – may have fallen by 1.8% in the month. 

And on Friday the US economic growth figures for the June quarter are released. There are three iterations of the economic growth figures each quarter – the advance, preliminary and final estimates. The final estimates for the June quarter are expected to confirm that the US economy grew at a 3.7% annualised rate – well above the “speed limit” of around 2.5% after a weak – but weather-affected – March quarter result of 0.6% growth. 

Also on Friday, the University of Michigan’s consumer sentiment survey for September is issued. The preliminary reading was down sharply, a fall of 6.7% to 85.7 in line with weaker sentiment readings in other parts of the globe. 

Sharemarkets, interest rates, commodities and currencies 

The Aussie dollar has fallen sharply over the past year. Measured in terms of currencies per US dollar, the Aussie dollar has recorded the 17th largest decline against the greenback of 120 currencies monitored, down 26.5%. But for travellers, that means that there are 16 currencies that the Aussie has appreciated against including the Brazilian real, Norwegian krona and the NZ dollar. A year ago the Aussie dollar was at NZ$1.1050. Today the Aussie is worth NZ$1.1320. The Aussie has lifted 30% against the Brazilian real and just over 1% against the Norwegian krona over the past year. 

Over the last three months the links between the US Dow Jones index and the Australian S&P/ASX 200 index have tightened. The measure of correlation, or R-squared ratio, stands at 0.82, where a ratio of 1.00 would indicate that the two indexes move perfectly together. Over 2015 as a whole, the R-squared stands at 0.62 whereas in 2014 the R-squared ratio was just 0.04. 

Over the same 3-month period, the R-squared ratio between the Dow Jones and Japanese Nikkei was 0.85 and the ratio between the Dow and UK FTSE was 0.87, showing that the correction has been very much a global event.