All eyes on Australian earnings today

Five key markets in focus today: CBA, CSL, Japan 225, China A50 cash and AUD/JPY.

ASX 200
Source: Bloomberg

Commonwealth Bank (CBA)

Net interest margins even in this highly competitive market have managed to increase to 2.14%, as CBA sees retail funding outpacing expectations and wholesale funding costs falling. This saw the bank’s preferred measure of cash earnings beating the street, if only slightly, as housing demand picked up seeing CBA lending $130 billion in housing and business loans.

CSL ltd (CSL)

 Earnings are due pre-market and the market expects NPAT to increase 11% to US$1.354 billion. Company guidance was for 10% growth. Sales are expected to increase 5.6%. Traders will be looking at CSL Behring, the IG business, and whether we see a new buyback being announced; with expectations a buyback of around US$900 million should be announced.

Japan 225 (Nikkei)

At 09:50 we get Japanese Q2 GDP and as it stands expectations are for a 7% decline in growth on the year. There are even a couple of economists who are expecting a contraction on the year of 9%. GDP by its very nature is backwards-looking; however a contraction of 9% could really throw weight behind calls for further easing in October and certainly behind concern calls that another increase in the sales tax later in the year could really derail the recovery.

China A50 cash

At 15:30 today we get the monthly China data drop with fixed asset investment (expected to grow at 17.4%), retail sales (+12.2%) and industrial production (+9.2%) due. The trend of late has been for strong data out of China and markets there have responded favourably to the mix of stimulus measures.

AUD/JPY

On Friday we saw a strong move off the 200-day moving average (now at 93.87) and 76.4% retracement off the rally from May. In turn we saw a bullish hammer candle on the daily chart, which in theory could signal a rally is due in the coming days. At 11:30 today we get Q2 wages in Australia and the market expects a 2.6% reading on the quarter, which is unchanged from Q1. Effectively when adjusted for inflation we are seeing negative wages in Australia, which is never good for any economy, although it seems the thematic in many major economies.

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