Markets Week Ahead: US reporting season begins, March jobs data to follow

Markets Week Ahead: US reporting season begins, March jobs data to follow

The Australian share market is likely to start the new week with trading sentiment in its favour. Overseas markets produced another series of record highs, again led by the Dow Jones and S&P 500. Those records are set to be put to the test this week as US reporting season kicks off, with the banks first in line to deliver earnings results.

 

Economic calendar and news

Business confidence and consumer confidence are first-up on the local economic agenda this week, with both readings coming in at multi-year highs and only expected to have continued growing.

The most important event over the coming days, however, will be the latest employment figures from March. Economists expect that the unemployment rate is likely to come in flat at 5.8% as an increasing number of people returning to the workforce offsets a modest increase in jobs added last month. This will also be the last report before the impact of the removal of JobKeeper becomes visible.

In the US, inflation is this week’s big-ticket item. The year-on-year rate is expected to show a significant increase given the low base of last year where deflation momentarily took hold. On a monthly basis, however, the rate is still expected to tick up to levels seen at the end of last year.

Retail sales will also provide a picture as to whether consumers are using their stimulus cheques, with forecasts tipping sizeable growth of around 5%. Other data this week includes industrial and manufacturing production, plus housing starts and building permits.

 

 

Major movers

Financials are on watch this week as the main banks in the US kick off earnings season. International names set to report include JP Morgan (NYSE: JPM), Wells Fargo (NYSE: WFC), Goldman Sachs (NYSE: GS), Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Morgan Stanley (NYSE: MS)

Following the injection of several rounds of stimulus into the US economy, the recovery has exceeded most expectations. In turn, this also means that the reserves banks set aside a year ago for loan losses may well be reversed. With both factors taken into consideration, consensus forecasts are tipping the banks to deliver an enormous turnaround in profit growth versus a year ago.

It isn’t just the banks reporting, as a number of other names also hand down results. Taiwan Semiconductor Manufacturing (NYSE: TSM) and UnitedHealth Group NYSE: UNH) are two of the biggest names, both holding a significant sway over their representative sectors. Another name to keep an eye on will be Delta Air Lines (NYSE: DAL), which despite being a smaller company, will shed light on how the airlines see travel faring.

Closer to home, out-of-favour construction giant Cimic Group (ASX: CIM) is hosting its annual general meeting this Wednesday. The company’s share price has sunk to a multi-year low amid concerns about its cash flow position and the strength of its balance sheet, particularly in light of the collapse of supply chain financier Greensill Capital. 

A day later, Woodside Petroleum (ASX: WPL) will also host its own AGM, ahead of next week’s quarterly report. Sticking with ASX names set to report, Whitehaven Coal (ASX: WHC) will deliver its March production report this week.

Elsewhere, after delivering shareholders acquisition news last week, EML Payments (ASX: EML) enters the new trading week full of momentum, circling an all-time high. 

It’s not the only stock on a tear as the market looks to top 7,000 points, with names like Macquarie Group (ASX: MQG), Washington H. Soul Pattinson and Company (ASX: SOL), Mineral Resources (ASX: MIN) and Premier Investments (ASX: PMV) also sharing that accolade. The variety of names in this list indicates the broad-based strength that has helped the ASX perform so well in recent weeks. 

As the backlog of IPO candidates builds up, including names such as Iceni Gold, Black Canyon, Island Pharmaceutical and 92 Energy, one new listing has been locked-in at the time of writing. Delorean Corporation (ASX: DEL), a developer and operator of renewable generation assets, begins trading at midday today Sydney-time after raising $14 million at $0.20 per share.

 

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