DIARY: Australian Profits To Dominate, Hopefully

It's another big week for the markets and economy here and offshore.

Will the markets settle, or will we face more of last week's craziness?

Australian interim and full year profit reports for the June 30 period will peak from this week on, Japan's latest GDP and trade data will be released tomorrow and Thursday, more important data from the US and Europe from tonight and the minutes of the Reserve Bank board meeting on August 2 are due for release tomorrow.

In fact the debate over interest rates will revolve around the RBA minutes: those looking for a rate cut (or cuts) this year will be looking for signs of 'dovishness' in the words, those looking for a rate rise, will be seeking the same justification.

And those who believe the August 2 meeting showed sign of a split on the RBA board will be looking for support for their case.

Economic data this week is include Labour Price Index and Average Weekly earnings for the three months to June and May respectively, and car sales for July (out today).

The June 30 reporting season sees a slew of major companies reporting both interim and especially full year figures, including major group such as Leighton, Wesfarmers, Woodside and AMP.

Westpac will deliver a third quarter update after the NAB delivered its update last week and the CBA and Bendigo Bank reported solid full year profits.

Fortescue, ASX, Newcrest, Ansell, Eastern Star Gas, Imdex, iiNet and UGL will all hand down full year results.

QBE, Santos Woodside Westfield, Westfield Retail trust, OZ Minerals, Adelaide Brighton and Boart Longyear, APN News & Media and Invocare are all due to report interim results,

James Hardie Industries hands down first quarter results.

Full-year results are also due from Tabcorp Holdings, CFS Retail Property Trust, Echo Entertainment Group (the old casinos business of Tabcorp) , GWA Group, Commonwealth Office Property Fund, OneSteel, Macmahon Holdings, Salmat, Boral and CSL are down to release full year results

ARB Corporation, Boral, Biota, Brambles, Dexus Property Group, SAI Global, SMS Management & Technology, SkyCity Entertainment Group, Ardent Leisure Group, Village Roadshow, Platinum Asset Management and Goodman Group, Billabong International, Sedgman, Spotless Group, Fletcher Building, Telecom Corporation of New Zealand, Duet Group and Super Retail Group and The Reject Shop will also report 2010-11 results.

The AMP's chief economist Dr Shane Oliver says that so far the June half profit reporting season in Australia has been uninspiring with better than expected results from 41% of companies (compared to a norm of 45%) and worse than expected results from 33% (versus a norm of 24%).

He said 70% of companies have reported positive year on year profit growth but outlook statements have come in on the cautious side.

"We expect that it will be pretty tough with softening household demand, rising unit labour costs and the strong Australian dollar all expected to have constrained overall earnings per share growth to around 10% over the last financial year, but with this masking 32% growth in the resources sector and a 5% decline in earnings in the industrials ex-financials," Dr Oliver said.

"Meanwhile, after underperforming global shares since April last year, Australian shares look to have turned the corner in a relative sense as investors have started to factor in interest rate cuts as opposed to rate hikes."

Dr Oliver said that after falling 20% or so since their highs earlier this year "shares had become very oversold and due for a bounce at least.

"On valuation measures shares are clearly cheap with forward price to earnings multiples for global, Asian and Australian shares falling to around 10 times indicating great value for long term investors. But beyond a short term bounce it's too early to say whether shares have bottomed.

"We expect the next few months to remain volatile as investors remain nervous about a return to recession in the US and Europe but with somewhat better US economic data and a move towards QE3 providing support."

Corporate meetings (annual and extraordinary) include: Merchant House International, Monitor Energy Ltd, Segue Resources, Eureka Energy, Mirabela Nickel, Cleveland Mining, Minemakers, Aditya Birla Minerals Ltd, Continental Coal, Crescent Gold Ltd, Gujarat NRE Coking Coal Ltd.

In the US, the New York Empire manufacturing conditions survey due tonight, is expected to improve slightly and likewise for the Philadelphia manufacturing conditions survey due Thursday.

Housing starts data for July due Tuesday and home sales data due Thursday to remain consistent with a bottoming in the housing sector.

Industrial production data is due tomorrow night, and the PPI and CPI inflation data is due on Thursday:

Dr Oliver says we can expect all three sets of data are likely to be subdued or weakening, especially inflation with energy costs falling.

Retail earnings will dominate the reporting season in the US.

Results from more top retailers are expected next week; including Wal-Mart Stores, Urban Outfitters, Abercrombie and Fitch are due to report.

Tech giants, Hewlett-Packard, JDS Uniphase Corp and Dell Inc. are scheduled to report their quarterly results this week

Industrial and farm equipment manufacturer Deere & Co, also reports.

In Asia, all eyes will be on Japan as Tokyo releases the second estimate of second quarter GDP growth and trade data for June with the country's post-earthquake recovery to be assessed.

In Europe, full second quarter growth figures for the EU and eurozone will be issued, figures for France on Friday showed no growth, while the Greek economy slipped 6.9%.

UK retail price index and consumer price index data for July is scheduled, as well as the minutes of The Bank of England's monetary policy committee meeting on August 4.

British July retail sales data are due for release later in the week.