Business News

Dramatic data week ahead

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by Peter Switzer

The Yanks had their best month on the stock market in 12 months with the Dow Jones up over seven per cent while the local S&P/ASX 200, while up four weeks in a row, only added 4.46 per cent in July!

Over the weekend, the US indexes were close to flat and that was despite a weakish economic growth number. However there was some better economic news, which will keep investors on Wall Street guessing.

For those wanting to see positives, CNBC pointed out that the fear index or VIX fell 32 per cent in July.

Data watch

On the reporting front, Chevron and Merck, which reported Friday, and Motorola, which reported Thursday, kept the good reports coming and with two-thirds of S&P 500 companies having done their show and tell three-quarters have beat expectations.

On the economy, and GDP growth was up 2.4 per cent against a consensus of 2.5 per cent but business investment looked pretty promising in the figures.

Meanwhile the Thomson Reuters University of Michigan consumer sentiment index beat expectations despite falling against June’s reading and Chicago manufacturing also beat the forecasters’ estimates.

The week ahead in the US

The big news for the Yanks next week will be the July jobs report on Friday but the ISM manufacturing index, construction spending, July auto sales, pending home sales, factory orders, the ISM services index and July chain-store sales will grab the attention of market players.

It’s a huge week for the US economy and could make or break this tentative rally.

Slow growth for manufacturing in China

On Sunday, the Chinese released its Performance of Manufacturing Index which fell to 51.2 in July from 52.1 in June and this was the third straight month in which it had fallen. And as this was the slowest expansion in 17 months, this could play on the market today.

Game on

Locally, the election will be grabbing all of the headlines and so the RBA rates decision will be a big event but it should be a non-event, with Julia Gillard having nothing to worry about. There will be no rise.

We will also get the latest on retail, building approvals and manufacturing early in the week, so the latest economic snapshot of the economy should be there for the politicians to see and make play of for positive or negative purposes.

With the US economy weakening while corporate earnings are strengthening, as Julia said to Tony Abbott when she became PM: “It’s game on!”

And the drama continues.

For advice you can trust, contact Switzer Financial Services.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Monday, August 02, 2010