Market-watchers 'interested to see if markets have rebounded'

Reporting this week: Sky TV. PHOTO: Stephen Jaquiery
Reporting this week: Sky TV. PHOTO: Stephen Jaquiery
The most eagerly anticipated thing on the local economic calendar this week will be the ANZ Business Outlook survey, due out at 1pm tomorrow.

Craigs Investment Partners broker Chris Timms said the survey skipped January and the February release would be the first seen since December.

"Economists and market-watchers will be very interested to see if confidence has rebounded from the weak post-election readings, which looked to be very much a knee-jerk reaction to a change in government.''

The latest monthly migration numbers were due for release tomorrow and markets would again be watching for any signs of the drop-off many economists were expecting, he said.

Net migration was slightly stronger than expected in December, rising to 5700 from 5660 during the previous month.

In the United States, a key focus this week would be the first appearance before Congress of Jerome Powell as Federal Reserve chairman.

Mr Powell would deliver his first semi-annual monetary policy report to the House Financial Services Committee tomorrow (NZ time), before testifying before the Senate Banking Committee on Friday, Mr Timms said.

"Markets will be interested to see whether Powell offers his personal outlook for the economy and markets, as well as for any comments on inflation and interest rates.''

Two key events were taking place in Europe over the next week or so, Mr Timms said.

Firstly, the members of Germany's Social Democrats (SPD) party had been voting to decide whether to enter a new coalition with the Conservatives, led by Angela Merkel.

The German vote would close on Friday and the results would be announced two days later.

That just happened to be the day Italy went to the polls for its 2018 parliamentary election, which would be a tight race and it could well be inconclusive, Mr Timms said.

The results should be known on Monday.

Although New Zealand had passed the busiest period of the reporting season, there was still plenty happening.

In New Zealand, Mercury, Scales, Sky TV, Trade Me, Vector and Vista Group would report. Gentrack would also hold its annual meeting.

"The reporting season has been strong on the NZX so far. Median earnings growth for 2018 has risen to 6.1%, up from 5.6% on January 31,'' Mr Timms said.

Three-quarters of the NZX50 were expected to experience positive earnings growth in the full year. This month, 15 companies had their consensus earnings estimates bumped up and 10 had had them reduced, Mr Timms said.

On Thursday, data was expected to show New Zealand's terms of trade had lifted 1% during the three months ending December.

ASB chief economist Nick Tuffley said a second successive lift would take the terms of trade to another record high.

"Looking at the drivers, all major exporters have posted price gains over the quarter.''

Dairy and fruit prices were likely to lead the export price rise. The terms of trade were expected to remain near record highs for the rest of the year.

Building consents were due out on Friday and Mr Tuffley said it was likely uncertainty concerning the Government's new KiwiBuild policy was temporarily weighing on housing construction demand.

If that was the case, consents were expected to remain subdued until further policy details were revealed.

 

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