US sharemarkets had their worst week since June last week, closing 4 per cent lower after Federal Reserve chair Jerome Powell’s highly anticipated speech at Jackson Hole.
Dr Powell dashed hopes of an imminent dovish pivot, noting the Fed would continue to raise interest rates and keep them higher for longer.
The ASX200 closed flat on the week at 7104, erasing early losses supported by another round of Chinese economic stimulus and a better week of earnings reports.
Here are the top five things to watch in markets this week:
1. Australian June-half reporting season enters the home stretch
Australian June-half reporting season is in the home stretch and has provided some clarity around which companies have been able to raise prices to combat rising costs and those that have seen their margins crimped.
Reports are due this week from Woodside, Link Administration and St Barbara.
2. US non-farm payrolls
Supporting Dr Powell’s hawkish tone at Jackson Hole, non-farm payrolls are expected to show the US economy added 300,000 new jobs in August following a gain of 528,000 in July.
The unemployment rate is expected to remain unchanged at 3.5 per cent.
3. Australian housing prices set to fall again
The correction in the Australian housing market is gaining pace and spreading across capital cities outside of Sydney and Melbourne following the acceleration of the RBA’s rate tightening cycle in June.
CoreLogic data out on Thursday should show prices in capital cities fell by about 1.2 per cent in August.
4. Australian Capex data
Capex contains estimates of actual and expected new capital expenditure by private businesses for selected industries in Australia.
The market is looking for a small increase in Capex of 0.2 per cent in the June quarter.
The third estimate of 2022-23 planned business investment spending will likely be about $145 billion, a 12 per cent upgrade on the second estimate, but slightly below what might be expected at this stage of the year.
5. Eurozone inflation to make new record highs
The market is expecting headline Eurozone inflation to print at 9.0 per cent after last month’s 8.9 per cent print, with the Core CPI figure to come in at 4.1 per cent.
Energy prices will be a major focus for traders heading into the cooler months, and with inflation likely to show no signs of slowing in the interim, the report will reaffirm the dire situation the European Central Bank is faced with, including high inflation, slow growth and an energy crisis.
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