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An evidence based week ahead

Last week’s market panic faces a stiff test this week. Both macro and corporate data dominate the calendar. Investors and traders are likely to have more evidence this week on which to base their actions. Questions about China growth, US corporate health and the global state of inflation will see at least partial answers this week.

This may explain the late rally in US trading on Friday night. The Dow bounced back from a weekly fall of more than 1500 points, reclaiming better than 400 of those points in the last two hours of trading. Citigroup and JP Morgan reported better than expected quarters, although Wells Fargo disappointed. Analysts will be busy with 54 top 500 companies delivering results over the next 5 days, starting with Charles Schwab and Bank of America tonight.

Investors have much to contemplate at the macro-economic level. China will report lending data, retail sales, industrial production and GDP numbers, speaking directly to fears around growth and credit. In Japan CPI and trade reads could dictate trading, and UK retail sales and wages reports could influence markets. In the US retail sales, housing numbers and Fed minutes may drive action.

Australian investors face a challenge at this morning’s opening. Despite positive moves for US shares and buoyant industrial commodities SPI futures were belted at the New York close, suffering a 51 point loss for the session. The first hour of trading may indicate whether this was an error or the beginning of further underperformance for Australian shares.

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