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

 


World Week Ahead: Economic reality check

World Week Ahead: Economic reality check

By Margreet Dietz

Aug. 18 (BusinessDesk) - Data to be released in the US and Europe in the days ahead will go a long way to determining whether the threat to global growth will prove transitory, and give investors a green light to push stock prices ever higher.

Last week offered evidence that the American consumer may be somewhat less confident than previously believed as both retail sales and consumer confidence fell short of expectations. Even so, the positive flip side of that coin was that it bolstered hope the Fed will hold off on increasing its target interest rate.

On Friday a report showed that the Thomson Reuters/University of Michigan preliminary sentiment index dropped to 79.2, the lowest since November. And disappointing earnings from retailers including Wal-Mart and Kohl’s underscored those data.

Home Depot, Target and Lowe’s are among companies scheduled to report their latest quarterly this week.

Federal Reserve “Chair [Janet] Yellen specifically cited pessimism over household income as one of the headwinds that’s impacting the US economy right now, and these figures would seem to underscore her point,” Dana Saporta, director of US economic research at Credit Suisse in New York, told Bloomberg News.

For additional clues on the outlook for rates, investors will pour over minutes of the latest US Federal Reserve meeting in July, which will be released on Wednesday. As well, comments by policymakers at the Fed’s annual Jackson Hole, Wyoming global central bank gathering will be scrutinised more closely than ever.

Investors will also eye reports on the housing market index, due Monday, housing starts, due Tuesday, and existing home sales, due Thursday, to get a better handle on one the key areas of the US economy that has struggled to recover.

Other reports set for release in the coming days include the consumer price index, due Tuesday, and then weekly jobless claims, the preliminary PMI manufacturing index, the Philadelphia Fed survey, and leading indicators, due Thursday.

Last week, the Dow Jones Industrial Average added 0.66 percent, the Standard & Poor’s 500 Index increased 1.22 percent, while the Nasdaq Composite Index climbed 2.15 percent.

So far this season, about three-quarters of S&P 500 companies have surpassed earnings expectations.

Meanwhile, there is sufficient uncertainty about the global economic outlook to strengthen the appeal of US Treasuries. Thirty-year bonds advanced last week, pushing yields 10 basis points lower to 3.13 percent.

German 10-year bonds also rallied, with yields falling to a record low below 1 percent in part after data showed its economy contracted in the latest quarter, an ominous sign for Europe’s powerhouse.

On commodity markets, the price of oil jumped on Friday amid intensifying tension between Russia and the Ukraine. Front-month October Brent crude gained US$1.46 to settle at US$103.53 a barrel, narrowing its decline for the week to 1.7 percent, according to Reuters.

"The market is keeping an eye out for any geopolitical tensions," Carl Larry, chief executive officer at consultancy Oil Outlooks in Houston, told Reuters.

In Europe, the Stoxx 600 rallied 1.9 percent last week, as did the UK’s FTSE 100 Index. Here, the region’s top three economies, not just Germany, showed that their individual recoveries are not assured and the euro-zone economy itself unexpectedly stalled in the second quarter.

The disappointing growth data, however, has renewed hope that the European Central Bank will pull out extra measures to help stoke the area’s economic engine though it seems unlikely to do so anytime soon.

The latest data on the euro zone will arrive in the form of the trade balance, due Monday, current account, due Tuesday, German producer prices, due Wednesday, euro-zone manufacturing, services, and consumer confidence, due Thursday,

Minutes from the latest Bank of England meeting will be released on Wednesday.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

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