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Investor Signposts: Week Beginning Nov 05 2018

Investor Signposts: Week Beginning Nov 05 2018

By Expert Panel 05.11.2018


Investor Signposts 5 Nov 18: US midterm elections the focus next week 

CommSec Senior Economist Ryan Felsman previews the economic data scheduled for the week ahead including the latest Reserve Bank Board Meeting on Tuesday, as well as the highly anticipated US Midterm Elections. 




Australia: Reserve Bank meets on Melbourne Cup Day

• The Reserve Bank dominates the local agenda in the coming week. The Board meets on Melbourne Cup Day, but no change in interest rates is expected. The quarterly update on monetary policy follows on Friday. Data releases are predominantly second-tier with monthly job advertisements, construction activity and housing finance all issued.

• The week kicks off on Monday in Australia when the Commonwealth Bank (CBA) and Australian Industry Group (AiGroup) both release their services gauges for October.

• Also on Monday the ANZ measure of job advertisements is issued. Vacancies have been choppy in recent months after peaking at 7-year highs of 178,787 in May.

• And new vehicle sales are issued for October. In September, 94,711 new vehicles were sold, down by 5.5 per cent over the year. In the twelve months to September, sales totalled 1,180,953 units, up just 0.1 per cent on a year ago. A record 495,872 Sports Utility Vehicles (SUVs) were sold over the year to September.

• The nation stops for the Melbourne Cup on Tuesday but the Reserve Bank Board convenes for the second last time this year to hand down its interest rate decision. No change in rates is expected, but commentary on financial market volatility, inflation, the Aussie dollar and developments in the housing and labour markets will be keenly observed.

• Also on Tuesday, the regular weekly reading on consumer confidence is published by ANZ and Roy Morgan.

• On Wednesday, the AiGroup’s Performance of Construction Index is released. The index fell to 49.3 points in September – the first contraction in construction activity in 20 months.

• Also on Wednesday the Bureau of Statistics (ABS) issues its “Selected Cost of Living” indexes for the September quarter, detailing changes over time in the purchasing power of the after-tax incomes of Aussie households. 

• On Friday the Reserve Bank releases its Statement of Monetary Policy. While all eyes with be on the Board’s economic growth and inflation forecasts, the projections for unemployment will come into sharper focus with the jobless rate hitting 6-year lows of 5 per cent in September – a level previously estimated as ‘full employment’.

• Also on Friday the Bureau of Statistics’ releases data on housing finance. Investor lending continues to decline due to weakening demand for homes (and falling home prices) in Sydney and Melbourne following greater regulatory oversight of bank lending practices. And the value of owner-occupier home lending is forecast to decline by 2 per cent in September, despite a pick-up in lending to first home buyers.    

Overseas: US midterm elections, US Federal Reserve meeting and China trade data in focus

• In the US in the coming week the focus will be on the midterm elections on Tuesday and the US Federal Reserve’s interest rate decision handed down on Thursday. Chinese trade and inflation data are also issued.

• On Monday in China, Caixin releases its services sector gauge for October. Sentiment improved in September, but firms reduced hiring after two years of expansion and profit margins came under increasing pressure.

• Also on Monday, the US services gauge is issued by the Institute for Supply Management. The non-manufacturing index rose to 61.6 points in September - the highest level since 2008.

• On Tuesday, Americans head to the polls with the midterm elections considered to be a referendum on the Trump Administration. All 435 seats in the US House of Representatives are up for grabs. Thirty-five seats in the 100-member Senate are on the ballot this year as well. The outcome could influence future policy direction. 

• Also on Tuesday in the US, the JOLTs job openings report and the regular weekly chain store sales figures are issued. The number of job openings rose to a record 7.14 million in August as the labour market tightened.

• On Wednesday the US Federal Reserve Open Market Committee (FOMC) begins its monetary policy meeting. While interest rates are not expected to be lifted, economists are expecting a rate hike in December. Policymakers’ commentary on recent sharemarket fluctuations, the neutral rate of interest, housing market weakness, trade tensions, softening business investment and labour market strength will be closely observed.

• Also on Wednesday in the US, monthly consumer credit and the regular weekly data on mortgage applications are released. And on Thursday data on claims for unemployment benefits (jobless claims) is issued.

• On Thursday in China, international trade data is scheduled. Exports were up by 14.5 per cent over the year to September, boosted by the weaker renminbi currency, producing a record trade surplus with the US.

• On Friday, consumer and business inflation data for October are issued in China. Rising food prices - boosted by surging pork prices due to a swine flu outbreak – lifted consumer prices by 2.5 per cent over the year to September. But annual business prices fell to a 3.6 per cent growth rate as US trade tensions weighed on demand.   

• Also on Friday, data on producer prices, consumer confidence and wholesale inventories’ cap-off a busy week in the US. Producer prices increased by 0.2 per cent in September, while a revision to wholesale inventory estimates for August showed the biggest jump in nearly five years, beating forecasts.


>> BACK TO THE NEWSLETTER: Click here to read other articles from this week's newsletter

Important Information: The summary and attached report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker.



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