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Diary: Scant Margin for Error

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2023-04-10

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While markets in this holiday-shortened week will focus on US and Chinese inflation, Chinese trade data and several central bank meetings, Australian investors will have to focus on Thursday’s jobs data for March and what they might mean for the future direction of local interest rates.

Quite a lot on, in fact. There’s also US inflation and retail sales, Chinese inflation and trade data, Australian jobs and right at the end a trio of big American banks with their quarterly reports for the three months to March.

Will we follow the US example last Friday with a set of figures that hint more strongly at a labour market fraying at the edges?

So far the Australian jobs market seems to be a bit stronger than the US and with the Reserve Bank deciding to wait and see what happens in the economy after the multiple rate rises in the past year, a clear easing in the data would be a positive for markets.

Local economists forecast around 20,000 new jobs for March, down from the high 64,000 in February (which more than offset January’s misleading 15,000 drop).

The jobless rate is forecast to come in at 3.6%, up from 3.5% in February.

This week also sees the release of the monthly business survey from the National Australia Bank and the latest consumer confidence data from Westpac and the Melbourne Institute.

Both are followed closely by the Reserve Bank and the NAB survey in particular, with its additional focus on employment intentions and costs, as well as capacity utilisation figures, has been helpful in revealing what is happening in the wider economy.

The NAB survey is expected to show another easing in confidence last month and a mixed report on the strength of business conditions.

Some March quarterly reports will emerge from the mining sector this week, but more will be released from next week onwards, especially from the likes of BHP, Rio Tinto and Pilbara Minerals.

There are also meetings of central banks in Canada and South Korea this week and analysts do not expect any move on rates.

Besides the US inflation and retail sales reports, four senior Fed members are due to appear in public this week - two today and two on Wednesday when the minutes of the last Fed meeting will also be released.

Markets have absorbed Friday’s mixed March jobs report from the US with little trouble but the focus has always been on the strength of American inflation - at both the consumer and producer levels - and that includes investors here in Australia.

Gold and currency markets will be on edge ahead of the US data release and that will spill over into the Australian markets, especially with local gold prices around record levels above $A3,000 an ounce.

For Australian investors, the Chinese data on inflation today and trade on Thursday will more interest than normal and will test the re-opening story.

China also releases data on vehicle sales and on house prices this week.

Elsewhere in Asia there’s the first estimate of Singapore’s economic growth and an expected decision from the Monetary Authority of Singapore to slow its monetary policy tightening.

The Bank of Korea is expected to leave interest rates unchanged at its meeting this week. The last rate rise was in January to 3.5%.

In Europe, there’s data on industrial production, retail sales and GDP in the UK for March.

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