After the excitement of last week, this week should be quieter, even though two central banks are meeting – The US Fed and the Bank of Japan on Friday. The May US consumer inflation report mid-week could trigger a return of volatility to markets if the data shows no change in US price pressures (as early forecasts suggest).
There’s also important job data from Australia and inflation figures from China. The pressure will be on gold (and copper and silver as well) after the bulls saw their over-optimism blow up in their faces on Friday.
The most important corporate event will be the shareholder meeting of Tesla, where shareholders will vote on Elon Musk’s controversial multi-billion dollar share deal. This occurs just as the EV giant sees sales and margins slide around the world, especially in its vital Chinese market.
Tesla also aims to switch its incorporation from Delaware to Texas and be one of the earliest companies to list on the new stock exchange being planned for that state, to compete with Nasdaq and the New York Stock Exchange.
Monday saw Nvidia trade with more shares on issue and a lower share price, which should provide a brief fillip for investors.
The midweek Fed meeting (statement and media conference after 4 am Thursday, Sydney time) will likely see the central bank leave interest rates on hold at 5.25-5.5% and retain a cautious bias, following the May jobs data that upset the expectation of a cooling labor market. The jump in job numbers and wages nixed that idea for the time being.
But as important as the decision and the post-meeting statement are, it’s the dot plot of Fed officials’ forecasts of their views on future interest rate moves that will be the most anticipated event from the meeting, considering there’s no chance of a rate cut. March’s plot showed three rate cuts this year; now the expectation is for two, but it could likely be a little confusing with a closer set of predictions.
Wednesday also sees the release of the consumer inflation data. US economists do not foresee much change in either the headline or core rates, perhaps around 3.4% to 3.6%. It depends on how much the “shelter” category of the CPI has moved, along with insurance costs, which are generating a rising tide of protest in the US (as they are here).
Thursday’s producer price data is expected to confirm a slowing in costs for many businesses. China’s consumer and producer price inflation are also out Wednesday (earlier in the day than the US data). A small rise in the CPI to 0.4% from 0.4% is forecast by AMP chief economist Shane Oliver; producer prices will remain negative.
The Bank of Japan meets Friday to consider monetary policy, with a chance of a slight tightening according to AMP’s Shane Oliver.
A quieter week for Australia after last week’s weak GDP report and other data, with the May jobs data the main release. The NAB business survey for May is out Tuesday, while population data for the September 2023 quarter will also be out, along with the May labor market update.
AMP’s Shane Oliver said the jobs data is “expected to show a 20,000 gain in employment with unemployment falling back slightly to 4% from 4.1%, as the higher than normal number of people in April indicating that they were waiting to start in a job they had already found is unwound.”