Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
AU economy
This week features a bumper run of data points that will give us a good glimpse into the state of the Australian economy. Namely: CPI on Wednesday, retail sales and building approvals on Thursday.
Markets have continued to push back the expectation of rate cuts and this data will give us a closer view of what we can expect from the Reserve Bank of Australia (RBA).
Importantly, the more imminent concern will be whether or not inflation is showing signs of further slowing. Last month, the August CPI finally fell into the RBA’s target range, rising just 2.7% year-over-year from a hotter-than-expected 3.5% in July.
It’s unlikely we’ll see much more of a significant drop in the month-on-month figures, and really, the RBA's key focus remains quarterly data, which will also arrive on Wednesday.
With rates not budging, retail sales data isn’t likely to shock markets this month. I’d anticipate that we won’t see any huge shift in sales prior to the Christmas rush.
Building approvals will likely tell us what we already know; it’s a bad time to be in construction. Australian housing availability is at a critical point and last month’s figures came in well below forecasts following a surprising jump in August thanks to an increase in apartment approvals.
The bottom line is we are still way off target for the necessary 1.2 million additional homes in 2024.
Even once inflation has been quashed, there will be plenty of ground left to cover – undoubtedly becoming an increasing focus as we move into an election year.
AU AGM season
The Australian Securities Exchange (ASX) Annual General Meeting (AGM) season has been packed so far, with Commonwealth Bank of Australia (ASX:CBA) (CBA) and Qantas being the big draw cards.
Qantas chairman John Mullen and CEO Vanessa Hudson provided shareholders with a comprehensive update on how the airline is performing, saying that performance over the past year has shown they are taking the right approach.
Among their updates, dividends are on track to resume from the second half of this financial year and employees are set to receive A$1,000 as a ‘thank you’ from the airline.
Coming up this week, we have Temple & Webster, CSL, Whitehaven Coal (ASX:WHC), Woolworths and JB Hi-Fi fronting investors, among dozens of other companies.
Key ones to watch here will be Woolworths and JB, with the former entrenched in controversy and the latter an important peek into retail earnings health ahead of the Christmas rush.
The big AGM draw this time round will undoubtedly be Guzman y Gomez on November 14. The Mexican fast food chain has been the ASX’s big yarn following its gangbuster IPO in May.
The brand’s personality-forward approach to markets has made an industry celeb out of CEO Steven Marks, so it’ll be very interesting to see how he performs in front of investors.
GYG's earnings outlooks have been strong but increasing scrutiny over its highly ambitious expansion plans may bubble to the surface once the mic is handed to the crowd.
US employment
It’s a big week in the United States with plenty of macro data for investors to digest, including Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) inflation but the focus will likely be Friday’s US unemployment and non-farm payroll data, the last print before the November 5 US election.
While unemployment is on target, we know the Federal Reserve (Fed) is not seeking any further cooling in labour market conditions.
Since September’s 50 basis points (bps) rate cut, markets seem less certain what the outcome will be when the central bank makes its next call this month, just two days after the US election.
It’s unlikely Jerome Powell will be seeking to rattle any cages so soon, and with last month’s significant cut likely to still be taking its toll, a pause seems to be on the cards.
The expectation is for 125,000 job additions and the unemployment rate to remain unchanged at 4.1%. However, there is a strong possibility that we could see a number significantly below that, especially given the hurricanes that have taken place in the south of the US.
For now, markets see more than a 90% chance the Fed cuts by 25 bps at its November meeting but a significant shift in any of the US data points last week will likely shift those expectations.