An interesting week ahead for the markets thanks to news from China, the US and the RBA.
The market isup 37 points.The Dow Jones was up 59 at 16,323. The market opened strongly after positive leads from Europe and continued speculation of economic stimulus in Europe and China. Weakness in the afternoon was blamed on position squaring ahead of quarter end. The market traded in a 150 point range.
US economic data was positive — Consumer spending rose 0.3% in February (previous 0.2%) and income also rose 0.3% (previous 0.3%), both in line with expectations. The Thomson Reuters/University of Michigan consumer sentiment index rose to 80 although it was lower than expected.
US bonds markets were weaker — The yield on the 10 year bond rose four basis points.
European markets were stronger — The UK FTSE up 0.41%, the French CAC up 0.74% and the German DAX up 1.44% after weak Spanish inflation increased stimulus expectations.
Chinese Stimulus — TheChinese Premier Li Kegiangsaid the government would gradually roll out targeted measures to help economic activity and that economic growth should be maintained at a “reasonable pace”, increasing speculation of further stimulus. Recently announced plans involve injecting US$160 billion to renovate crumbling urban housing and and more into rural irrigation projects. Other plans include channeling capital into building new rural roads and expanding the nation’s high speed rail network.
The Australian dollar rose to US 92.96c and is now trading at US 92.53c.
Gold fell US$0.90 or 0.07% to US$1293.80 an ounce
Fed Speak — Chicago Fed President Charles Evans told the Credit Suisse investment conference that rates will stay low. This view differs from St Louis Fed President James Bullard, who spoke at the conference earlier this week. He believes the Fed will start increasing rates in the first quarter of next year, and expects 4-4.25% by the end of 2016. Most other Fed members see rates rising no higher than 3% by the end of 2016.
RBA meeting tomorrow – No change in rates is expected. Of 13 economists survey by AAP, 4 believe the RBA’s first rate hike will occur in late 2014, and 9 said there will be one or more increases in the first half of 2015. Only 2 of the 13 economists surveyed say there will be another cut in the cash rate. The median forecast for the cash rate at the end of 2015 is 3.25%.
The main number this week will be the US jobs numbers on Friday. Unemployment expected to fall to 6.6% with a 190,000 non-farm payrolls increase.
Chinese PMI numbers – Final PMI numbers for March (Tues – Est 50.1). HSBC Manufacturing PMI (Tues – Est 48.1).
In the US – Manu PMI (Wed), ISM Manufacturing survey (Wed), ADP employment numbers (Thurs).
Locally we have retail sales (Fri), building approvals (Wed), new home sales, RPData Rismark house prices (Tues) and trade data (Fri).
Company News — QBE AGM (Wed).
A lot of dividends being paid out — the CBA pays its dividend on Thursday.
Seven Group Holdings (SVW) and Nexus Energy (NXS) — Has entered into a merger implementation agreement under which SGH will acquire all of the shares in NXS at 2c per share subject to regulatory and other conditions.