Investors await news on inflation and RBA rates decision

A key inflation number, an RBA meeting and corporate updates from Solomon Lew’s Premier Investments and building materials company Brickworks will be the focus for investors this week.

A key inflation number, an RBA meeting and corporate updates from Solomon Lew’s Premier Investments and building materials company Brickworks will be the focus for investors this week, while mixed performances from global markets over the weekend are likely to kick off the trading week on a muted note.

Australian inflation data for August, released on Wednesday, will be closely watched by the market, crucially for what it means for the Reserve Bank as it weighs up cutting interest rates – following the 50 basis point cut in the US last week.

That thinking of the RBA board around inflation and interest rate settings will become clearer this week when the bank has its two-day meeting starting on Monday, with most economists predicting it will leave rates on hold.

Consensus forecasts predict the August inflation rate will fall below 3 per cent for the year from 3.5 per cent in July and sit at around 2.9 per cent for the September quarter.

Job vacancy figures, also released this week, will provide a better snapshot of the strength of the Australian economy.

On the corporate front, Premier Investments will release its full-year results on Wednesday to reveal the impact of worsening retail conditions on its portfolio of fashion brands such as Smiggle, Peter Alexander and Just Jeans, and also a trading update for the start of the fiscal 2025 year.

Billionaire retailer Mr Lew could also update the market on talks Premier is having with Myer to sell the department store its retail apparel brands, which also include Portmans, Jay Jays, Jacqui E and Dotti, as well as ongoing plans to demerge Smiggle and Peter Alexander.

On Thursday Brickworks, the nation’s largest brickmaker and leading building materials company, will release its full-year results, as will stablemate investment house Washington H Soul Patts, with Brickworks already warning the market it will book $172m in impairments to its Australian and US building materials businesses due to a slowdown in the building sector and pricing pressures.

US and European markets mostly retreated on Friday following the rally sparked by a jumbo US interest rate cut. The S&P 500 index and Nasdaq pulled back, but the Dow closed at a fresh record.

“After this week of all-time highs on just about every index, it wouldn’t surprise me that both investors and traders are taking a break,” said Bokeh Capital Partners’ chief investment officer Kim Forrest.

There had been fears the rate decision could signal officials were worried about the economy and were behind the curve in easing policy. But data showing jobless claims at their lowest since May suggested the US was heading for a soft landing rather than a recession.

Asia’s main markets closed the week mostly higher. The yen reversed earlier gains after the Bank of Japan decided against another hike to borrowing costs.

The Bank of Japan began to move away from its long-running policy of ultra-low rates in March – which saw the first increase in 17 years – but a second hike in July sent shockwaves through markets and caused a surge in the yen.

Europe’s major markets all closed lower on Friday, with Frankfurt shedding 1.5 per cent after hitting a record high the previous day.

Shares in German auto giant Mercedes-Benz sank more than 7 per cent after the group lowered its outlook on the back of weak sales in its key Chinese market.

Additional reporting: AFP