Markets week ahead: Westpac and CBA earnings, should oil stocks rally yet?

With further weakness in US markets ending last week, it could be another soft start for the ASX this morning, but tech sentiment will largely influence things throughout the week as Apple and Microsoft are trading at key technical levels.

Calendar and economic news

Last week was dominated by central bank action, with three rate hikes rolled out in Australia, the US and the UK.

It was the latter of them that really put the cat among the pigeons in terms of market nervousness, with the bank of england raising rates for the fourth consecutive meeting and warning that inflation could still accelerate to double-digit territory, as the risk of a recession still looms as a possibility.

Locally, the economic calendar is rather light for the news this week, with business and consumer confidence data the main asset, while the latest figures on building permit, housing approvals and new home sales will play second fiddle.

It’s a different proposition in the United States, however, where a deluge of speeches are expected for members of the Federal Reserveand we are likely to hear more about the central bank’s views on the interest rate outlook, the risk of a global economic slowdown and its desire to create a “soft landing” by tightening monetary policy.

US inflation the data will be out Wednesday morning US time, with economists predicting the first real moderation in numbers we’ve seen in recent months, although a reading continues at elevated levels. The consensus forecast suggests a reading of 8.1% YoY for April, which would be lower than the 8.5% recorded in March. The data should be treated with some caution, however, as lower gasoline prices played a role, but oil prices have since risen.

While staying abroad, the focus can also be on China trade dataset that will be released today. Amid ongoing lockdowns in various cities, including the financial and port hub that is Shanghai, the government will release data on imports and exportsboth are expected to be down sharply from a year ago.

Markets week ahead: Westpac and CBA earnings, should oil stocks rally yet?

Stocks under watch

While tech stocks have been driving much of the market volatility over the past month or so, and year-to-date for that matter, Westpac (ASX: WBC) and Commonwealth Bank (ASX: ABC) will play a vital role in determining the performance of the ASX this week.

Westpac released its FY22 interim results this morning, reporting a 5% decline in statutory net profit year-on-year, revenue down 8% on the same period and net interest margins under additional pressure. WBC slightly increased its interim dividend to 61 cents per share for the six months. The news follows a strong result from National Bank of Australia (ASX:NAB) last week, which made strong inroads in generating profit growth in the commercial lending sector at a time when the home loan market is rife with competition and leading to margin compression.

Commonwealth Bank will issue a third-quarter trading update on Thursday, where comments surrounding its mortgage portfolio will come under scrutiny following the RBA’s first rate hike in more than a decade. Although higher rates may give lenders the opportunity to restore margin growth, overall loan volumes may be sensitive to rate fluctuations, particularly if real estate interest declines.

After a lackluster performance in real estate stocks last week, names like Owned Domains (ASX: DHG), REA Group (ASX: REA), Goodman Group (ASX:GMG), Scentre Group (ASX: SCG) and Charter Hall Group (ASX:CHC) will be back on watch as investors continue to assess the path of interest rates.

On the one hand, house prices are often seen as vulnerable in a rising interest rate environment if borrowing activity and demand for property declines. The comparative yield offered by REITs also becomes less attractive in the face of rising rates, while REITs often face higher interest costs during a rising rate cycle due to the large borrowings they carry. their balance sheets.

Meanwhile, China’s trade data could impact a slew of Hong Kong-listed logistics stocks, including those engaged in container shipping, transportation services, as well as shipping and handling solutions. supply chain. Some of the stocks in this sector include COSCO Expedition (HKG: 1919), Orient Overseas (HKG: 0316), JD Logistics (HKG: 2618), SITC Co (HKG: 1308) and China Merchants Port Co (HKG: 0144)among others.

Energy stocks, both domestic and foreign, ended a strong week amid rising oil prices. In the United States, the sector grew by 10% last week. With oil prices firming up over the weekend, movements in the price of oil over the next few days will set the tone for whether the sector can continue to rally. Occidental Petroleum (NYSE:OXY) led the charge last week, climbing 17.9%, and it will also be watched closely this week as it reports on Tuesday at US time.

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Steve R. Hansen