Markets Week Ahead: ASX Banks, RBA and US jobs report to steer stocks

Markets Week Ahead: ASX Banks, RBA and US jobs report to steer stocks

Australian shares enter the new trading week seemingly unmoved by weakness in US markets to end April, however, a positive open for US futures this morning has helped. Three of the Big Four banks report this week, while the latest commentary from the RBA and Federal Reserve, alongside US jobs data, could set the tone for monetary policy and what that means for global equities.


Economic calendar and news

The Reserve Bank of Australia will play a key role in guiding local markets over the coming days, with the central bank set to convene for its monthly Board meeting on Tuesday. That will be followed by Deputy Governor Guy Debelle’s speech on monetary policy on Thursday, and the RBA’s Statement on Monetary Policy to end the week.

Other items on the local economic calendar this week include services and manufacturing activity for April, home loans for March, export and import activity for March, plus the latest reading for job advertisements. In March, job advertisements hit their highest level in 12 years, as 10 consecutive months of growth in job ads quashes concerns about the end of the JobKeeper program.

Overseas, a number of similar data-points will also be published in the US, but the focus for economists will be job figures for last month. Consensus estimates suggest the US economy may have added as many as 1 million jobs in April, with the participation rate tipped to rise, and the unemployment rate expected to drop from 6% to 5.7%. 

A number well in excess of 1 million jobs created may actually prompt some concerns among traders that the Fed Reserve could be compelled to act sooner in tapering its bond-buying activity and in lifting interest rates.



Stocks on watch

Entering the new trading week, earnings will prove a talking point both locally and abroad. Data from Refinitiv shows that 87% of S&P 500 companies that have reported thus far have exceeded earnings forecasts, with growth just shy of 50%. The prevailing themes this week will be US-listed pharmaceuticals and travel stocks, not to mention Australian bank shares.

Westpac (ASX: WBC) has published its half-year results for FY21 this morning, with the bank recording a mammoth 256% rise in interim cash earnings to $3.5 billion. It is also eyeing $8 billion in cost reductions over the next three years. Last week, the bank disclosed that it would incur a $282 million impairment on the back of customer refund expenses and divestment activities, although gross gains from an investment in Coinbase dwarfed the losses.

Other banks in the spotlight this week will be ANZ (ASX: ANZ) and National Australia Bank (ASX: NAB), with the duo set to report half-year results on Wednesday and Thursday respectively, and Macquarie Group (ASX: MQG), which hands down its full-year results on Friday. Meanwhile, Bank of Queensland (ASX: BOQ) trades ex-dividend on Wednesday courtesy of a 17 cent fully-franked dividend.

This week’s three-day Macquarie Australia Conference, one of the largest investor conferences in Australia each year, could also spell confession season for some names. It is typical for a number of companies to issue trading updates throughout the conference, with over 100 companies likely to be in attendance.  

Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) report over the coming days, with the two set to unveil their first quarters where there has been a full contribution in terms of production and sales of COVID-19 vaccines. Both names have recently hit multi-month highs, as some nations have backed away from the rival vaccine produced by AstraZeneca. 

In terms of travel names, look out for results from Booking Holdings (NASDAQ: BKNG), Hilton Hotels (NYSE: HLT), Marriott Vacations (NYSE: VAC) and Caesars Entertainment (NASDAQ: CZR). Each of these names enter reporting season with strong momentum, which contrasts ASX travel stocks, where some steam has come out of the sector for Webjet (ASX: WEB) and Flight Centre (ASX: FLT).

Berkshire Hathaway (NYSE: BRK.B) held its annual meeting over the weekend, with the Warren Buffett-led company continuing to buy-back its own shares in the first quarter, while also boosting its operating income by 20%. The event has also drawn attention after Charlie Munger took aim at bitcoin, calling it “disgusting and contrary to the interests of civilization”. 

Rounding things out, PayPal (NASDAQ: PYPL) will also post Q1 earnings this week, with the likes of Xoom and Venmo expected to make a strong contribution, alongside the broader shift to digital payments.


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