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Tough lead into reporting season

Tough lead into reporting season

New tariffs and tough talking central bankers unsettled markets last week. Strength in the US dollar and Japanese Yen, a rising gold price and record lows for bond yields indicate rising risk aversion. The nervousness could see a shaky start to Asia Pacific trading today ahead of a hectic week.

Data due speaks directly to investors’ growth concerns. Today’s Caixin services read kicks off the calendar that includes PMIs for major European nations, trade data for China and GDP in Japan. Following Friday’s nights weaker than expected US non-farm payrolls any release that indicates further weakness in important economies could put further pressure on crumbling stock markets.

The Reserve Banks of Australia and New Zealand deliver interest rate decisions on Tuesday and Wednesday. Analysts are forecasting a 0.25% cut for New Zealand, dropping the cash rate to 1.25%. In contrast, Australian interest rate markets indicate almost no chance of a change after two adjustments in the previous months. Both nations’ currencies are under pressure from weakening growth sentiment and a resurgent US dollar.

The weakness comes at a crucial time for Australian shares. The semi-annual reporting season will see reports from Commonwealth Bank, Transurban, AMP, AGL, IAG and James Hardie this week, among many others. Resource stocks are expected to feature given key commodity prices have surpassed consensus forecasts over the last year. Lower growth rates and cautious consumers mean the outlook for industrial and financial stocks is less bright.

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