The final week of the 2023-24 financial year, the second quarter of 2024, and the first half of the same year is approaching, so companies and investors are reviewing their books to ensure the best performance can be reported. They are also identifying any black holes in revenue, cash flow, or earnings that can be adjusted, papered over, or buried without disturbing share prices.
However, some companies are not faring well. A quartet of early downgraders—Bapcor, City Chic Collective, Mosaic Brands, and KMD Brands—have already sought the help of their banks (and investors in some cases) to keep their operations running and shops open for business.
Books will be ruled off next Sunday, June 30, for companies, governments, investors, and other businesses. For markets, things end on Friday, June 28.
June 30 is also significant for other reasons. The first round of the French parliamentary elections will be held on this day, with the second round on July 7. The UK elections will be held on July 4. The first debate between President Biden and his predecessor, Donald Trump, will be held on June 27 (Thursday/early Friday morning our time).
As far as the wider markets are concerned, inflation in the US, Australia, and Canada will be the main driver this week ahead of the end of the financial year.
The most important data is the US Personal Consumption Expenditure figures for May, which will be released on Friday.
AMP chief economist Shane Oliver says that “with CPI and other inflation data for May pointing to a small 0.1% month-on-month rise in the core PCE inflation rate, bringing the annual rate down to 2.6% year-on-year from 2.8% year-on-year.”
“This will be welcomed by the Fed as it’s the core PCE that it targets and follows the hotter inflation readings seen through the March quarter.”
The Australian monthly inflation indicator on Wednesday might be mixed news because of seasonal and statistical factors.
Shane Oliver wrote at the weekend, “The May monthly CPI (Wednesday) is likely to show an implied fall of 0.2% month-on-month after several strong months, helped by a 3% fall in petrol prices.”
“May also has a seasonal tendency to weakness, having fallen in four of the last six years. However, because of a 0.4% fall a year ago dropping out, the annual CPI increase is expected to rise to 3.8% year-on-year from 3.6% year-on-year,” he warned.
Meanwhile, the Westpac/Melbourne Institute consumer survey (Tuesday) is likely to show that sentiment remained very weak in June.
Private credit data for May (Friday) from the Reserve Bank is likely to show a further uptick in housing credit growth. There are also speeches from RBA Assistant Governor Kent (Wednesday) and Deputy Governor Hauser (Thursday), which will be watched for any clues on the outlook for interest rates.
Canadian CPI inflation for May (Tuesday) is expected to show a further fall to 2.6% year-on-year from 2.7% year-on-year.
The Swedish central bank meets Thursday, but economists think it will not follow the Swiss National Bank and make a second cut in its key rate. It cut the policy rate to 3.75% at its last meeting but will wait for a while longer.
Elsewhere in the US, there is consumer confidence data, house prices (both Tuesday), durable goods orders for May (Thursday), and sluggish growth in May personal spending data (Friday).
Dr. Oliver says the first presidential debate on Thursday “will likely start to increase market focus on the US election, with a risk that talk of a new intensified tariff war under Trump may start to make share markets nervous.”
He also says that if the French parliamentary elections on Sunday see strong outcomes for the far-right National Rally, then markets “may take that badly.”
Japan sees its usual end-of-month data for May on Friday, which is expected to show unemployment remaining around 2.6% with a bounce in industrial production.