Multiple market risks this week make predictions tough
THE week ahead is packed with multiple market risks, and economists say predicting the risk bias in interest rates is much harder than usual.
The first major offshore event is the Bank of Japan meeting today.
Markets are speculating the Bank of Japan will alter policy as a result of structural challenges posing difficulties in implementing current policy objectives.
ASB senior economist Mark Smith said any changes would be interpreted as a step towards less monetary policy accommodation by market participants, generating higher yields.
The United States Federal Reserve would release the outcome of its meeting at 6am Thursday New Zealand time.
Craigs Investment Partners broker Chris Timms said markets did not see it as a ‘‘live meeting’’ where rates would change.
The one in September was seen as the likely big week for central bank meetings.
‘‘Finally, and possibly most interestingly, the Bank of England decision is out on Thursday evening and markets see a good chance of the BOE raising its policy rate from the current 0.5%.’’
In New Zealand, the key events include the ANZ July business confidence report today and the secondquarter employment data tomorrow.
Residential building consents were also due today.
Westpac senior economist Michael Gordon said a sizeable fall in the number of consents issued in June was expected. The level of issued consents was still expected to remain elevated, supported by continued high numbers of consents for medium density homes in Auckland.
The May consents were affected by a large increase in the usual stable standalone homes category.
Like most other economists, Mr Gordon expected unemployment to remain at 4.4% when Statistics New Zealand released the June quarter figures.
The second quarter reporting season continues in the US.
Mr Timms said it was another very busy week in terms of the global reporting season, as 160 S&P 500 companies were due to report.
Some of the higher profile global companies scheduled to report included Apple, Caterpillar, Shire, Ecolab, Tesla, Cerner and Berkshire Hathaway.
With more than half of the S&P 500 having now reported results, 77% had exceeded sales forecasts and 83% had beaten earnings expectations.
The overall earnings growth rate for the S&P 500 was 21.3%, which would be — if maintained — the secondhighest since September 2010, he said.
In New Zealand, Green Cross Health, Evolve education and Oceania Healthcare were all holding annual meetings. Pushpay would release its quarterly update. In Australia, Rio Tinto, Janus Henderson and ResMed were all due to report results.