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The big issues for shares this week

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by Peter Switzer

The Switzer Stocks Scoreboard looks back at the week that was in money, economics and business ahead of the start of reporting season in the USA this week. The company profit results and outlook statements could make or break Wall Street’s drive above the Dow 11,000 level and beyond.

On Friday, the Dow Jones index ended up 70.28 points to finish at 10,997.35. The S&P 500 put on 7.93 points to 1194.35.

The important VIX or fear index remains at a low 16.18 and by the way, the Dow did go over 11,000 — the first time since September 2008 — but it could not hold it.

In good economic news last week, the Thomson Reuters same-store sales index hit a new record in March and it coincided with six weeks up for Wall Street.

On Friday, investors liked oil company Chevron’s upbeat outlook.

Gold saw a one-year high as the euro struggled with uncertainty over Greece and its debt rescue plan.

On earnings ahead, a Thomson Reuters survey says S&P 500 earnings is tipped to rise 36.8 percent from a year ago and that’s the benchmark that will drive the market up or down.

Australian in review

Locally, the stock market was up for a record nine weeks in a row with the ASX 200 ending at 4,948.1.

That’s 0.82 per cent for the short Easter week and since 5 February the index is up 9.6 per cent. We’re at 18-month high levels, which takes us back to the failure of Lehman Brothers.

Takeover talk and higher commodity prices have driven the market up with the Macarthur Coal takeover story best summing it up.

And it marries into the fifth interest rate rise in six meetings last week from the Reserve Bank as it says its big concern is a terms of trade shock, which means high export prices driving income to Australia and causing inflation.

Keeping pressure on interest rates is our strong job market which remains at the 5.3 per cent unemployment level, though NSW, Victoria, WA and SA saw rising unemployment. In fact, SA went from 4.8 to 5.4 per cent! That’s huge.

Big watches here and abroad

What’s going to be a big watch this week?

Monday: Earnings from Alcoa.
Tuesday: Trade balance; import/export prices; earnings from Intel.
Wednesday: Mortgage, retail and CPI data, business inventories, crude inventories; beige book; earnings from JPMorgan Chase.
Thursday: Empire state manufacturing survey; industrial production; Philly Fed report; housing-market index; earnings from Google, AMD.
Friday: housing starts; consumer sentiment; earnings from Bank of America, GE, Mattel & Gannett. (Sourced from CNBC).

Australia

In Australia, the big news will be:

Monday: Housing finance (February).
Monday: Credit & debit cards (February).
Tuesday: Lending finance (February).
Tuesday: NAB business survey (March).
Wednesday: Westpac-Melbourne Institute Consumer sentiment (April)

For me, the US company earnings and the Yank’s economic data are must watches. Here it will be the data on business and consumer sentiment, which will be crucial to whether the Reserve Bank backs off its interest rate torture. Have a great week.

For advice you can trust, contact Switzer Financial Services.

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Published on: Monday, April 12, 2010