Traders’ Diary: Everything you need to get ready for the week ahead

What grabbed the headlines last week?

That was another week given over to shotgun weddings and banking turmoil.

Just as the crisis lurched from one bad idea to another, central banks all over the place merrily continued to raise their interest rates like they were running out of time – Monday to Friday saw multiple moves from officials in Norway, in the Philippines and in Taipei.

We also got action from The US Federal Reserve Bank, the Bank of England (BoE) and those big hitters at the Swiss National Bank, who also oversaw the forced shotgun wedding of their two children UBS and Credit Suisse.

Yup. Life for traders is just one adventure melding into another.

Looking for positives… Gold enjoyed an absolutely stellar week and is now up more than 20% over the past six months, prompting OANDA senior market analyst Ed Moya to commit that a run into record territory is “not that far away.”

Stockhead’s Josh Chiat has been typically relentless in his gold digging this week. That’s where I’d go if I were seeking succour.

CREDIT-19

The ongoing anxiety over dirty, dirty banking contagion really gave global share markets a right volatile week with some wonderfully improper swings and about turns.

But, either because of lingering confidence in the US economy, or a total systematic loss of perspective, over the last week on Wall St, US shares gained 1.4%. Likewise, in the EU markets rose 1% – and that’s despite the loss of Credit Suisse on Monday and the implosion of Deutsche Bank shares on Friday.

Closer to home, mainland Chinese shares literally celebrated, up 1.7%.

On the ASX, were sense was more common, shares retreated 0.7%, dragged lower by anything to do with the banks – which actually look pretty good. However, all up ASX-listed banks dropped 0.45% (-1.2% on Friday), while the Financial Sector lost 1% for the week as well.

The real estate stocks and a mix of industrial and technology names also pulled the pants down.

The precipitous drop in oil prices that made things harder to get the head round, but it actually turned out to be a pretty good week for local energy stocks – the sector as a whole finished 3.2% higher, by far the best performer since last Friday.

Consumer Discretionary finished 2% up, with Telcos on 1.8%.

It was a real bad week for Real Estate stocks, though – shorn of an ugly-4.3%.

Bond yields mostly fell again, but aye that was sheer madness to watch (and I’m not sure it’s worth getting into, unless I can source a suitable picture.) Global oil and metal prices were shook all night long. Also losing mettle, was iron ore, which fell over late in the week.

Bitcoin did well. Currency markets got a rattling as the US dollar took on water, but that didn’t seem to excite the Aussie, which fell anyway.

On the banking crisis front it’s worth noting that the Doctor of This Economic Life, AMP Capital’s chief economist Shane Oliver is saying that the risk of further contagion remains high since the Americans made a bad situation worse last week.

“The US authorities have contributed to confusion over protection for bank deposits over $US250,000 with Treasury Secretary Yellen providing conflicting messages on this over three days reflecting the problems the US Administration has in extending protection without a backlash from Congressional Republicans.”

Over the short-term inflation is still sticky, so rising rates seem likely and last year’s surge in bond yields continues to feed through to other sectors of the economy like office property which Dr Oliver says will in turn will have an impact on banks.

However, he also offers some positive vibes:

The situation is nowhere near the broad-based bank asset problems that gave rise to the GFC (at least not yet)
US EU and The Swiss have moved quickly to limit contagion
Bank borrowing from the US Fed has fallen, outflows stabilised
Major central banks are taking account of the banking turmoil which implies less interest rate hikes than otherwise and that central banks may be at or near the top

Dr Oliver says it’s still early days, so let this week be a sensible one:

The bottom line is – so far so good – but history warns that the fallout from the monetary tightening of the last year still has a way to go yet including in terms of the impact on banks so volatility in share markets is likely to remain high for a while yet.

The Fed is likely nearly done.

The Fed raised its key Fed Funds rate by another 0.25% taking it to a range of 4.75-5%, with an acknowledgement of the dampening impact on activity and inflation from the banking turmoil, a downgrade to its tightening guidance and no change to the peak dot which remains at 5-5.25% suggesting just one more hike.

With demand likely to slow further, unemployment likely to rise and inflation expected to fall further our view remains that the Fed is nearing the end of its tightening cycle. While the Fed does not currently see rate cuts this year, in contrast to market expectations, we are allowing for one cut in December.

The week ahead

At home we’ve retail sales (Tuesday) and inflation data for February, these’ll be watched closely for what they might do for the ‘live’ RBA meet next week.

Job vacancies for February and private credit (Friday) look likely to show a further slowing in housing credit growth.

This week stateside, the American consumer confidence and their home prices are likely to cop a bath as well as a mild cold shower for personal spending growth

EU data on Friday is likely to show a slowing in headline CPI inflation for March. In Japan there’s detail around some. very low unemployment and a possible lift in industrial production.

Chinese business conditions PMIs for March (Friday) are likely to show continuing strength on the back of reopening.

The Economic Calendar
Monday March 27 – Friday March 31

All sources from Commsec and Investing.com

Australia

TUESDAY
Preliminary February Retail Sales MoM
RBA Speak Vice Governor Connolly Speech

WEDNESDAY
Monthly CPI Indicator

TURSDAY
Australia Job Vacancies QoQ

FRIDAY
February Housing Credit
Australia Private Sector Credit YoY

Global

TUESDAY
United Kingdom BOE’s Bailey testifies on SVB
United States Advance Goods Trade Balance

WEDNESDAY
United States Richmond Fed Business Conditions
United States Dallas Fed Services Activity

THURSDAY
New Zealand ANZ Business Confidence
Eurozone ECB Publishes Economic Bulletin
EU Consumer Confidence March
Eurozone Economic Confidence March
United States Initial Jobless Claims
United States GDP
United States Personal Consumption Q4
United States Core PCE
United States Pending Home Sales MoM
New Zealand ANZ Consumer Confidence IndexMar

FRIDAY
United States Personal Spending
United States PCE Deflator
United States PCE Core Deflator
Japan Tokyo CPI Ex-Fresh Food, Energy YoY
Japan Jobless Rate
Japan Industrial Production MoM
Japan Retail Sales MoM
China Composite PMI
China Manufacturing PMI
China Non-manufacturing PMI
United Kingdom GDP YoY 4Q
United Kingdom Private Consumption QoQ
United Kingdom Exports QoQ 4Q
United Kingdom Imports QoQ 4Q
United Kingdom Total Business Investment YoY 4Q
United Kingdom Current Account Balance 4Q
Eurozone Unemployment Rate
Eurozone CPI MoM