Mark Lister: Busy week ahead in uncertain financial times

There's a busy week ahead for financial markets, both here and abroad. Photo / File

COMMENT: There's a busy week ahead for financial markets, both here and abroad.

Local economists will be closely watching the latest ANZ Business Outlook survey tomorrow. Business confidence has been negative for nine consecutive months now, the longest stretch in more than a decade.

The June labour force report should make for more optimistic reading later in the week, with unemployment is likely to remain at 4.4 per cent. This would be the same as the previous quarter and the lowest in almost a decade, suggesting the New Zealand economy is still on a very sound footing.

The only disappointing aspect of the previous unemployment report was the lack of wage growth, with the seemingly tight labour market not yet feeding through to wage pressures. This will again be a focus.

Global sharemarkets will be watching trade talks, among other things. The US and Europe appeared to agree on a cease-fire over trade last week, and while it was light on detail this was at least a step in the right direction.

However, there's been no such truce between the US and China. More tariffs on Chinese goods are likely to be implemented over the coming days, and China will likely retaliate in kind.

There's also a raft of key central bank decisions looming, which our Reserve Bank will be watching closely ahead of their own meeting next Thursday.

The most important of these could be the Bank of England on Thursday evening, with many traders suggesting we might see UK interest rates increased. That would give the British pound a bit of a boost, in the wake of all the political drama in the UK of late.

The Federal Reserve in the US is also due to announce its latest policy decision. The Fed will probably pause this time, before hiking interest rates again in September.

Accordingly, there will be more interest in the statement and what the Fed thinks about the ongoing trade tensions.

Ahead of that meeting, the Fed will be watching the results of a key US inflation measure for signs of rising price pressures. In May, this measure saw the biggest gain since April 2012. The US releases its latest monthly jobs report as well, with unemployment forecast to fall slightly to 3.9 per cent.

Last but certainty not least, the corporate reporting season will continue across the world.

Overall, it's been fairly impressive so far. With more than half of the US market having reported results, over 80 per cent have beaten earnings expectations. Annual earnings growth is sitting at 21.3 per cent, which would be the second highest since 2010.

However, it's been a rough reporting season for some of the technology high-flyers. The market slammed Facebook and Twitter after results failed to meet expectations last week, while Intel and Netflix also fared badly.

It hasn't been all bad for the tech sector, mind you. Google, Microsoft and Amazon reported strong results that saw share prices rise, while all eyes will be on tech heavyweight Apple on Wednesday morning to see if they can deliver.

- Mark Lister is Head of Private Wealth Research at Craigs Investment Partners. This column is general in nature and should not be regarded as specific investment advice.