World Week Ahead: Policy makers centre stage

By Margreet Dietz

Feb. 6 (BusinessDesk) - After a stunning end to last week with a US jobs report that surpassed everyone's forecasts, it's hard to remain gloomy as the strong start of 2012 has taken many investors and analysts by surprise.

Wall Street posted yet another week of gains. The Dow Jones Industrial Average rose 1.6 percent in the past five days. The Standard & Poor's 500 Index climbed 2.2 percent for the week. That brought its gain for the year to 6.9 percent, the best annual start since 1987, according to Bloomberg.

American employers added 243,000 jobs in January, the most in nine months, and the unemployment rate fell to 8.3 percent from 8.5 percent in December, according to Labor Department data released on Friday. Those numbers were better than anyone expected and underpin recent signs that the world's largest economy by and large is recovering.

"The stars are aligning to push the market higher,” Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, told Bloomberg. The jobs data “was a very encouraging report. It should silence a lot of the skeptics out there who are saying that Europe is going to push the US into a recession.”

Investors will watch Federal Reserve Chairman Ben Bernanke's testimony on the economy to the Senate Budget Committee on Tuesday for fresh clues. He'll also speak on Friday at the 2012 National Association of Homebuilders International Builders' Show on "Housing Markets in Transition."

Economic data on tap this week in the US include the Thomson Reuters/University of Michigan's consumer sentiment index and international trade figures.

Walt Disney and Cisco are among the slew of companies set to report their latest earnings. Through Friday, 283 companies in the S&P 500 have reported results, with 60 percent posting earnings that have topped Wall Street expectations, according to Reuters.

That's better than in Europe where, according to StarMine estimates, about 57 percent of the 275 companies that have reported so far have fallen short of their earnings forecasts.

Even so, Europe's Stoxx 600 Index posted a 3.6 percent climb for the week.
Other factors have helped boost sentiment such as the talks between Glencore and Xstrata about an US$80 billion merger. The agreement is set to be announced this week, potentially Tuesday, when Xstrata is due to publish 2011 results, according to Reuters.

Investors will eye this week's meetings of monetary policy makers in Europe, Britain and Australia.

The European Central Bank will probably wait until its March meeting to drop its current record low key rate of 1.0 percent down to 0.75 percent, according to a Reuters poll, while the Bank of England is widely expected to boost the amount it is pumping into the struggling economy via asset purchases by 50 billion pounds (US$79 billion).

Meanwhile, Greece keeps on struggling to get the green light for its second financial bailout.

Euro-zone ministers postponed a meeting that had been scheduled for Monday, and aimed at finalising the Greek rescue, because of Greek reluctance to commit to reforms, according to Reuters.

The calendar for debt auctions in Europe in the coming days includes about 9 to 10 billion euros of new issuance from the Netherlands and Germany.

(BusinessDesk)

BUDGET 2012:
Parliament Debate Live - Video Of Budget 2011
Keith Ng Interactive Graphic: How the Budget Breaks Down
BUDGET 2012 - FULL COVERAGE: Reports / Analysis - Press Kit - Reaction (from everybody) - Previews (from everybody) - Pre-Budget Announcements

Gordon Campbell: On the Budget’s Spreadsheet Victories

It wasn’t as if expectations were sky high, exactly. Chances are, it was always more likely that we’d be seeing Bigfoot rampage through the Beehive lock-up than catch a glimpse of a credible growth agenda from this government. More >>

Sludge Budget Report - Short The Dollar! MEMO: To international bankers FROM: C.D. Sludge Please short the dollar! It'll be good for both you and us. And you know you want to. Greexit, Eurogeddon... watch out... flight to quality and all that. Follow your instincts. The NZ Debt Management Office has been so surprised at the unprecedentedly low interest rates that it can borrow at that it has already entirely pre-funded the 2013 fiscal deficit - all $8 billion of it! More >>

Pattrick Smellie Comment: Doddling along the best we can hope forCriticising Budgets for lacking vision or imagination is like shooting fish in a barrel, but even so, this year's Budget again feels like a missed opportunity. Perhaps it's the intrusion of real world needs that means the government couldn't make better political use of the $558.8 million it expects to gather in its first partial asset sale. More >>