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

 


World Week Ahead: Can the party continue?

World Week Ahead: Can the party continue?

By Margreet Dietz

Aug. 25 (BusinessDesk) - Equities might hold on to the momentum regained last week from a slew of better-than-expected economic data, while US Federal Reserve Chair Janet Yellen pointed to the remaining slack in the US jobs market, suggesting she is not ready to raise interest rates yet.

The US jobs market has improved. Job gains in 2014 have averaged 230,000 a month, up from the 190,000 a month pace during the preceding two years; the unemployment rate, at 6.2 percent in July, has declined nearly 4 percentage points from its late 2009 peak, Yellen said on Friday at the Fed’s annual Jackson Hole, Wyoming meeting of global central bankers.

“The economy has made considerable progress in recovering from the largest and most sustained loss of employment in the United States since the Great Depression,” Yellen said.

However, she also stressed concern about a lack of growth in wages.

“The labour market has yet to fully recover,” Yellen said.

“Indeed, in real terms, wages have been about flat, growing less than labour productivity,” Yellen said. “And, since wage movements have historically been sensitive to tightness in the labour market, the recent behaviour of both nominal and real wages point to weaker labour market conditions than would be indicated by the current unemployment rate.”

Wall Street ended Friday marginally lower, with the Standard & Poor’s 500 index closing 0.2 percent down from the record-high close of 1,992.37 on Thursday. However, for the week the Dow Jones Industrial Average climbed 2 percent, while both the S&P 500 and the Nasdaq Composite Index gained 1.7 percent.

"Janet Yellen confirmed the majority view of the (Fed's policy committee): much more labour recovery is needed before the Fed raises policy rates," David Kotok, chairman of Cumberland Advisors in Sarasota, Florida, told Reuters.

Last week’s gains brought the advance in 2014 so far to 4.2 percent for the Dow, 9 percent for the S&P 500, and 9.6 percent for the Nasdaq.

“As long as the economy continues to perform well, the market is in good shape,” Jim McDonald, chief investment strategist at Chicago-based Northern Trust, told Bloomberg News. “The Fed is also doing a good job at preparing the market for the eventual increase in interest rates.”

Indeed, bonds fell last week, pushing yields on five-year notes 12 basis points higher to 1.66 percent.

After last week's better-than-expected reports on the housing market, investors hope for more good news in the coming days. Data scheduled for release including new home sales, due today, the FHFA house price index and S&P Case-Shiller home price index, due Tuesday, and the pending home sales index, due Thursday.

There is a flurry of other economic reports scheduled for release, including the Chicago Fed national activity index, PMI services flash, and Dallas Fed manufacturing survey, due today; durable goods orders, consumer confidence, and Richmond Fed manufacturing index, due Tuesday; gross domestic product, weekly jobless claims, and Kansas City Fed manufacturing index, due Thursday, and Chicago PMI and consumer sentiment, due Friday.

In Europe, the Stoxx 600 jumped 2.1 percent last week, while the UK’s FTSE 100 Index rose 1.3 percent.

Here, eyes will be on the Ifo Institute’s monthly survey of economic sentiment among business leaders in Germany, due today, and especially the latest reports on euro-zone inflation as well as unemployment, due Friday.

As the Fed is looking at the timing to tighten monetary policy, the European Central Bank is considering ways to further accommodate the struggling euro-zone economy. In Jackson Hole, ECB President Mario Draghi signalled increased concern about the euro-zone’s inflation and unemployment.

“Central banks are no longer on the same side anymore,” Mohamed El-Erian, former chief executive officer of Pacific Investment Management, told Bloomberg. “Chair Yellen’s main challenge was how quickly should she lift her foot off the accelerator,” while Draghi “has the opposite problem -- how much should he step on the accelerator and when.”

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news