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Global economic outlook: Earnings, wages, and central bank watch

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2024-02-19

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On the agenda this week: more earnings, especially from AI giant Nvidia, from around the world; wages data in Australia; continuing worries about inflation and central bank interest rate policies; and the final estimate for German 4th quarter and 2023 economic growth.

Globally, it's the release of early data from monthly surveys of economic activity across major economies (except China).

Australia not only sees the release of the December quarter’s Wage Price Index but also Average Weekly Earnings for the six months to November, after Tuesday’s release of the minutes of the Reserve Bank’s board meeting earlier this month - the first under the new system.

AMP Chief Economist, Shane Oliver, says the minutes are likely to confirm that the RBA has "dialed back its hawkishness but still retains a mild tightening bias."

On the data front, the December Wage Price Index on Wednesday "is likely to show wages growth of 0.9% from the three months to September, taking annual growth to 4.1%."

Average Weekly Earnings are likely to show a slightly higher increase in the data out on Thursday.

Dr. Oliver says the flash activity surveys due Thursday for the US, Japan, Europe, UK, and Australia are "likely to show that the global economy is continuing to grow at a subdued pace with the US and Japan on the stronger side and Europe and Australia on the softer side."

In the US, the minutes from the Fed’s last meeting (out Wednesday) "are likely to confirm that it’s dropped its tightening bias and now sees things as better balanced and sees rate cuts as likely this year but is not rushing into them."

On the data front, expect a further fall in the US leading index (Tuesday) and a rise in existing home sales (Thursday).

US and European earnings reports will continue to flow. Besides Nvidia, watch for reports from Walmart and Home Depot.

Watch the Chinese markets closely today as trading resumes after the Lunar New Year week-long holiday.

Not only do share markets and forex trading resume in full, but there are also the monthly interest rate decisions - the one-year medium-term lending facility (MLF, currently 2.50%) the key rate for the second decision on Tuesday with the one and five-year prime loan rates which influence the cost of home mortgages.

Some calendars had the one-year decision down for Friday, but it is now down to be announced today (time is not given) because Friday was in the New Year break.

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