Retail data to rule the markets

A full week of economic data will set the tone for the local bourse, with December retail trading data and the latest CPI figures due, and another week of US earnings season adding flavour to market sentiment.

December retail data will be released on Tuesday, with AMP deputy chief economist Diana Mousina expecting the figures to show a softer-thanusual Christmas period, after shoppers flocked to early sales in November.

Ms Mousina said the CPI number should show that inflation is tracking below the Reserve Bank’s projections, and should provide some relief – to the market, consumers and eventually homeowners – that inflation rates are firmly headed downwards.

“The December quarter consumer price data (on Wednesday) is expected to show headline consumer prices up by 0.7 per cent over the quarter or 4.2 per cent year-on-year and 0.9 per cent over the quarter,” she said in a client note.

“The monthly data should show annual inflation running at 3.3 per cent over the year to December.”

Other local data releases include December credit figures, January home prices, the NAB quarterly business survey, December building approvals and housing lending figures.

Close watchers of the Australian resources sector will also be keeping an eye out for China’s manufacturing purchasing managers index (PMI) for any signs of economic recovery in the country – although that is also expected to show subdued levels of activity.

The US Federal Reserve also meets this week, but is widely expected to leave interest rates on hold.

Wall Street also offered a thin lead for local traders returning from Friday’s Australia Day market holiday, with the S&P 500 index closing down slightly on the week’s final day of trading to break a six-day streak of record high finishes.

The US earnings season could provide some leads on sentiment for the local bourse, with some of the biggest companies in the world set to report – including tech giants Apple and Microsoft.