Consumer spending and confidence in the spotlight
Economists will monitor consumer spending and confidence data released next week.
However, the messiness of second-tier data in Australia will likely again be overshadowed by developments in the Middle East.
A hawkish national speech by US President Donald Trump has markets excited ahead of the Easter holiday.
“The key takeaways were that the US would hit Iran ‘extremely hard in the next 2-3 weeks’ and if there was no deal, it would hit Iran’s power generator facilities,” said Commonwealth Bank economist Michael Tang.
“The optimism of the last few days about a quick and peaceful end to the war has quickly faded.
“The risk is a longer closure of the Strait of Hormuz and the destruction of other important energy and oil facilities in the Middle East.”
Australia’s S&P/ASX200 index fell 92.3 points, or 1.06 percent, to 8,579.5 on Thursday; oil prices rose more than six percent to over $107.
Dow Jones Industrial Index decreased by 0.13 percent to 46,504.67 points, S&P 500 index increased by 0.11 percent to 6,582.69 points and Nasdaq index increased by 0.18 percent to 21,879.18 points.
U.S. investors were hoping to find something meaningful in Mr. Trump’s prime-time speech to suggest a timeline for ending the Iran conflict.
However, AMP economist My Bui said that the optimism that prevailed at the beginning of the week was negated by the risk of further increase.
“We started and ended the week promising TACOs (Trump Always Releases Chicken), but it turned out we were feeding on NACHOs instead (He Doesn’t Actually Change the Hormuz Opening)!” he said.
Mr. Trump doubled down on threats to destroy Iran’s critical infrastructure over the weekend.
In an expletive-laden post on the Truth Social platform, he promised to hit bridges and power plants across the country if the strait was not opened by Tuesday evening US time.
Brent crude oil price rose further, surpassing US$111 per barrel by Monday morning AEST.
With the Strait of Hormuz effectively closed for over a month, even an immediate end to the war would cause months of disruption in many sectors.
Ms. Bui said government efforts to soften the blow to consumers by cutting fuel taxes only encouraged more driving at a time when supply needed to be protected.
What difference, if any, announcements on household confidence levels make may be revealed in the ANZ-Roy Morgan consumer confidence index on Tuesday.
While the series reached a record low of 58.8 points last week, inflation expectations fell to the highest level in the series’ 16-year history.
The Australian Bureau of Statistics will also release household spending data on Tuesday.
However, since the data covers transactions from February before the outbreak of war, it will be out of date by the time it is published.
Credit and debit card data from CBA through March 27 shows consumers are relatively resilient due to a sharp increase in fuel spending.
CBA’s economic team said spending was slightly softer on food and household items, but above-average savings buffers were helping households moderate consumption.
Australian share futures rose five points, or 0.05 per cent, to 5,166.
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