And on Friday the Reserve Bank governor delivers his semi-annual testimony to the House of Representatives Economics Committee. With any luck the focus will be on economics rather than activities at the note printing subsidiary. Getting some sense on what cash rate could be considered “normal” would be helpful.
In the US, the week begins with the Presidents’ Day holiday on Monday with financial markets and government offices closed. And on Tuesday the National Association of Home Builders will issue the activity index for February.
On Wednesday the usual weekly data on mortgage activity and chain store sales is issued alongside figures on housing starts and producer prices. Housing starts soared by 12.1% in December so economists understandably expect some retracement, with the median decline tipped being around 3%. There will be less interest in producer prices (business inflation) with inflationary pressures benign at present.
On Thursday the regular US weekly data on new claims for unemployment insurance (jobless claims) is issued alongside data on consumer prices, existing home sales, the leading index and Philadelphia Federal Reserve index. The main highlight is home sales with a modest 0.2% increase expected in January after the 1% decline in December.
Also on Thursday, survey group Markit will issue “flash” manufacturing readings for the US and a number of European nations. While it is possibly overdoing it to have two readings on manufacturing each month, financial markets are still showing interest in the data.
Sharemarket, interest rates, currencies and commodities
In the coming week the Australian profit-reporting (earnings season) gets into full swing. On Monday amongst the companies that are expected to report are Amcor, Bendigo Bank, BlueScope Steel, Lend Lease and Pacific Brands.
On Tuesday, results include those from Asciano, Coca Cola Amatil, Fantastic, Sonic Healthcare, Mt Gibson Iron and Commonwealth Office Property Fund.
On Wednesday earnings results are expected from BHP Billiton, Fortescue, GWA Group, Ramsay HealthCare, SEEK Limited, Super Retail Group, Suncorp, Tassal, The Reject Shop and Woodside Petroleum.
On Thursday, AMP, APN News & Media, ASX Limited, Brambles, Centro Retail, Fairfax Media, IAG, Origin Energy, Qantas and Toll Holdings are included in a packed schedule of earnings results. And on Friday, Billabong, Crown, Investra, Santos, Telecom NZ, and Transpacific Industries are listed to report earnings.
In the first 30 days of 2013 the Australian sharemarket has lifted almost 7% with the All Ordinaries up 6.9% and the ASX 200 up 6.8%. If the gains were to be replicated over the entire year the indices would post gains of around 60%.
However, it is instructive to turn back the clock 12 months. In the first 30 days of 2012 the key Australian share gauges were up around 5% – not as good as 2013 but still on track to gains of 44%. In the end, the All Ords rose by 13.5% over 2012 with the ASX 200 up 14.6%.
In short, we shouldn’t get too carried away. A period of consolidation will inevitably arrive.
Craig James is chief economist at CommSec.
