Everything is pretty much in pause mode pending a flurry of central bank meetings in Australia, US and Japan this week that are likely to provide some direction for markets.
On Friday Wall Street had an up and down session, ending pretty well where it started despite gross domestic product (GDP) data that looked solid at first glance.
That left ASX futures in marginally negative territory over the weekend, pointing to a soft start to the week.
Over the week, the ASX had a shocker, down almost 3 per cent as the renewed appetite for resources failed to offset the dumping of higher yielding defensive stocks.
Spot iron ore prices rallied more than 5 per cent over the week up to their loftiest point since early May, thanks to higher Chinese rebar steel (used in reinforced concrete) prices, which also pushed coking coal spot and futures prices higher.
Oil headed in the other direction, dropping below $US50 a barrel for the biggest weekly loss in almost two months as traders lost faith in OPEC regaining its cartel-like swagger.
Iran and Iraq are not fans of the production cuts being driven by the Saudis and bluntly told a private meeting of the big oil producers in Vienna over the weekend they did not trust the numbers behind OPEC's plan to cut up to 33 million barrels a day from the market.
A final decision on whether to cut or not is expected at an OPEC meeting set down for the end of November.
RBA to hold rates steady at Cup day meeting
The betting is the Reserve Bank will again hold the official cash rate at a record low of 1.5 per cent on Melbourne Cup day.
The market is pricing in only a 6 per cent chance of a cut, while the majority of market economists surveyed — 21 out of 27 — are also punting on a hold.
While it is unwise to bet against a favourite, it is worth pointing out that a 101-to-1 shot got up on Cup day last year.
Inflation is still well below the long-term trend, but right on the RBA's projection for a slow and steady rise back to its 2 per cent to 3 per cent target band.
The housing market is still strong, growth is picking up and Australia's terms of trade appear to be turning the corner on the back of stronger commodity prices, so there is no incentive to cut there either.
The accompanying commentary from Reserve Bank governor Phillip Lowe and Friday's quarterly Statement on Monetary Policy should give a clearer picture of current thinking, with a fairly positive message likely to point to the RBA staying on the sidelines for sometime yet.
There is also a solid flow of other key domestic data out this week.
Private credit (Monday) is expected to ease and house prices for October (Tuesday) are forecast to kick up again to more than 7 per cent over the year.
The volatile building permits series (Wednesday) should ease back a tad, but remain near historic highs. The focus again will be on the extraordinary — some would say disturbing — pace being set in the apartment sector.
September retail sales (Friday) are expected to grow at about 0.4 per cent, the same pace as in August, while the trade deficit (Thursday) is expected to again about $2 billion, with the recent surge in iron ore and coal prices expected to show up next month.
Federal Reserve, Bank of Japan and Bank of England all on hold
The other big central banks in the US (Wednesday), UK (Thursday) and Japan (Tuesday) all meet as well and all are expected to do either nothing or very little.
For the record, the European Central Bank will meet on Tuesday, but it is a non-voting meeting, so you can pencil a hold in there as well.
US GDP growth for the third quarter came in a 2.9 per cent, the strongest bounce in two years and ahead of consensus estimates.
Digging a bit deeper into the data, a large part of the jump was due to some pretty impressive shipments of soybeans — a huge quarter for the bean counters in the US Department of Economics and Statistics — rather than consumer-driven strength that would have made the Fed happier to lift rates.
Anyway, the Fed is not about to do anything rash just days before the US presidential election, and the whole subject of a hike may be revisited in December.
The statement from Federal Reserve chair Janet Yellen is likely to provide the most interest.
The US has important jobs data out (Friday) which may see unemployment drop lower again to 4.9 per cent.
The Bank of England decision is evenly balanced.
The UK so far seems to have weathered the Brexit vote pretty well and there is evidence inflation is back on track to hit 3 per cent sometime in 2018, although some big banks are betting on a 10-basis point cut just for insurance.
The Bank of Japan could surprise with a move too, primarily because it does not seem to mind the odd surprise and things are still pretty moribund and deflationary. A rate cut or stepping up the asset buying programs are both live options.
The global manufacturing pulse will be taken with October purchasing managers' index readings released for the US, UK, Europe, Japan and China on Tuesday and Wednesday.
From Australia's point of view, the Chinese PMIs — official and unofficial (Tuesday) — hold the most interest and may kick commodities higher still if there is evidence of an expansion in activity going on.
ANZ results head the corporate diary
The ANZ is expected to trot out full-year cash earnings — that is with one-off gains and losses stripped out — of about $6.2 billion, a 15 per cent slide on last year.
ANZ took out some trash last week announcing charges against earnings totalling around $360 million.
The market has embraced the tidying up the bank has been doing — exiting Asia and returning dividends to sustainable levels — and should applaud further cost cutting that is likely to be unveiled.
ANZ appears to be a bit ahead of the others in the bank's renewed focus on cost cutting to drive up profits, given there is nothing much happening in top line growth.
Bad and doubtful debts may edge up, and the bank will be happier it has the troublesome aspiring fertiliser magnates the Oswalds off their books — even if it did cost $145 million.
The world's biggest explosives maker Orica will release its full year results on Friday, while building materials supplier CSR will report its interim numbers on Wednesday.
There is a host of quarterly sales and productions figures being dropped as well.
| Australia | ||
|---|---|---|
| Monday 31/10/16 | Private sector credit Inflation gauge Origin Energy update Qantas update Infigin Energy update | Sep: Up around 6pc YoY Oct: TD Securities series Q3 production report Q3 trading update Q3 production update |
| Tuesday 1/11/16 | RBA meeting Home value index | No change expected Sep: Not helped by higher dollar, may bounce back Oct: CoreLogic RP Data series up 7 per cent |
| Wednesday 2/11/16 | Building approvals CSR interim results Nufarm AGM | Sep: Focus on apartment data |
| Thursday 3/11/16 | International trade ANZ FY results Boral AGM Downer EDI AGM Fairfax Media AGM Perpetual AGM REA update | Sep: Same old, $2bn plus deficit expected Q3 trading update |
| Friday 4/11/16 | Statement on Monetary Policy Retail trade Orica FY result | Key quarterly update from RBA, little change in inflation or growth forecasts Sep: Growing at around 0.4pc MoM |
| Overseas | ||
|---|---|---|
| Monday 31/10/16 | US: Personal income EU: GDP EU: Inflation | Sep: Very low growth Q3: Forecast to be 1.3pc YoY Oct: Core inflation around 1pc YoY |
| Tuesday 1/11/16 | US: ISM manufacturing UK: PMI | Oct: Gaining strength Sep: Spending may edge up after contraction Oct: Official and Caixin readings, marginal expansion of factory activity forecast Oct: Manufacturing may be weaker No change expected |
| Wednesday 2/11/16 | US: Fed rate meeting US: ADP employment change EU: ECB meeting EU: PMI | No change expected (Announced 5am Thursday) Non-voting meeting |
| Thursday 3/11/16 | EU: Unemployment UK: Interest rates | Sep: Still around 10pc Another hold, no change on QE either |
| Friday 4/11/16 | US: Non-farm payrolls US: Trade Balance | Oct: Another 170K jobs forecast, unemployment 5pc Sep: Deficit stuck at around $US40bn Sep: Deflating |
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