Josh Gilbert, market analyst at eToro, shares his three things to watch this week.
1. AU unemployment
After last week's rate rise, incoming economic data holds the key to whether Tuesday was the last hike in the RBA's current tightening cycle. This week sees the first set of that data with employment figures.
Employment looks set to remain robust, with unemployment figures lingering near record lows and net employment additions expected to be solid.
The RBA will know that increasing unemployment is on the horizon, with the full extent of current economic conditions yet to be truly felt by the economy.
Migration is high, and data from Seek this week showed job adverts are falling.
Market forecasts for unemployment month-on-month have remained fairly accurate, and while November’s reading is unlikely to be the first time we see a sharp increase in the unemployment figures, it’s hard to see levels remaining low far into 2024.
With that being the case, it's unlikely the Reserve Bank will feel the need to tighten policy any further from here.
2. AU consumer confidence
Next week's reading of consumer confidence is unlikely to indicate that consumers are feeling any more positive following another rate rise from the Reserve Bank and hotter-than-expected inflation.
This latest move from the RBA will undoubtedly put pressure on households, especially as savings continue to evaporate just ahead of an expensive time of year.
With many Australian households feeling the pinch, pressure is mounting on the Federal Labor Government to reconsider its plan to introduce stage three tax cuts.
One of the party’s key election promises, the planned cuts to tax for high-income earners would likely cause a boost to retail sales and consumer confidence while doing little to ease the pressure felt by mortgage holders and renters – many of whom will inevitably feel the unwanted sting of this week’s rate rise, right before Christmas.
3. Alibaba (NYSE:BABA) and Tencent earnings
It's been a pretty miserable year for these two tech giants, with broader tech shares globally seeing huge gains while these Chinese-based companies continue to underwhelm.
China's struggling economy has weighed on these companies despite the relaxation of regulations from Chinese Authorities. The good news for investors is that both these stocks have depressed valuations, making them attractive for contrarian investors.
Alibaba’s future may be looking brighter, however, with recent news from CEO Eddie Wu indicating the company aspires to become an open tech platform and provide infrastructure for AI innovation and transformation in thousands of industries.
Tencent also has some positives on the horizon, with the company recently announcing it will be globally launching TanLIVE, its climate community platform, at the upcoming 2023 United Nations Climate Change Conference. The platform is designed to empower and connect organisations working towards carbon neutrality.
Alongside lower valuations, earnings expectations are rising. A strong set of results next week, alongside solid forecasts, could be the tailwind these tech giants need to get a leg up in this market.