Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


World Week Ahead: Data key to rally

World Week Ahead: Data key to rally

By Margreet Dietz

June 23 (BusinessDesk) - Wall Street is at record highs, backed by the US Federal Reserve’s ongoing commitment to providing easy money to help accelerate the economic recovery, and investors will be looking to a flurry of fresh data to provide further impetus.

Today, investors will eye the release of the latest China manufacturing purchasing managers’ index to gauge if the world’s second largest economy is showing signs of stabilising.

Closer to home, the coming days will bring the latest data on the US housing industry, a question mark in what otherwise looks like a sustained recovery. A report on existing home sales is due today, followed by the FHFA house price index, the S&P Case-Shiller home price indices, and new home sales on Tuesday.

“The recovery in the housing sector remained slow,” Fed Chair Janet Yellen said last week, pointing specifically to a hesitancy among banks to approve mortgages to homeowners with less than “pristine credit.”

Last week, the Dow Jones Industrial Average gained 1 percent to close at a record high 16,947.08, the Standard & Poor’s 500 Index added 1.4 percent to end at an all-time closing high of 1,962.87, and the Nasdaq Composite index rose 1.3 percent.

A key reason for the rally is that while the US economy is continuing to improve, the slow pace means that the outlook for interest rates remains very favourable.

The VIX, a gauge of US stock volatility, fell 11 percent last week.

"What (we) have is a sweet combination of a self-sustaining, long-lasting economic expansion joined with a long-lasting monetary accommodation," Steven Einhorn, vice chairman of hedge fund Omega Advisors, told Reuters.

Other clues on the US economy will arrive in the form of the Chicago Fed national activity index, and PMI preliminary manufacturing index, due today; consumer confidence and the Richmond Fed manufacturing index, due Tuesday; durable goods orders, the final reading of first-quarter gross domestic product, and PMI preliminary services, due Wednesday; weekly jobless claims and the Kansas City Fed manufacturing index, due Thursday; and consumer sentiment on Friday.

As for fixed-income investors, they have begun worrying about inflation and they are far less comfortable than Yellen is about the outlook. The recent surge in oil prices, and the potential for even higher prices with Iraq’s increasingly volatile situation, adds to that concern.

“Just as oil prices had become increasingly stable, we reckon the risk for an oil price spike is now the highest since the global crisis," Christian Keller, an economist at Barclays, told Reuters. "We think a further price spike of 10 to 15 percent from here is not implausible."

Into this rising risk environment, the US Treasury will sell US$30 billion of two-year notes, on Tuesday; US$35 billion of five-year securities the next day, as well US$13 billion of two-year floating-rate notes; and US$29 billion of seven-year debt, on Thursday, according to Bloomberg.

In Europe, the Stoxx 600 advanced 0.3 percent last week. The FTSE 100 Index climbed 0.7 percent, inspired by a US$46.5 billion takeover bid for specialty drug maker Shire from AbbVie. Shire rejected the offer, saying it was too low.

“I expect that M&A activity in Europe will go on till the end of the year,” Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna, told Bloomberg News. “A lot of companies are sitting on a pile of cash. Some US companies will get a tax advantage by buying European companies, so I expect cross-border deals to continue."

Euro-zone manufacturing PMI, due Monday; German Ifo, due Tuesday; German consumer sentiment, due Wednesday; euro-zone confidence, and Germany’s consumer price index, due Friday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news