Posted February 26, 2017 11:55:06

Photo: A listless session on Wall Street points to a slow start to the week on the ASX. (AAP: Dean Lewins)

The latest batch of GDP figures and US President Donald Trump's address to a joint sitting of Congress are the big-ticket items of the week.

While there is little doubt Australia's economy will rebound back to growth after the surprise third quarter contraction, there remains considerable uncertainty about what Mr Trump will say and how it will be interpreted.

That uncertainty translated into another listless session on Wall Street on Friday, which points to a slow start to the week on the ASX with futures down 0.3 per cent in weekend trading.

The "Australia in Recession" headlines will have to wait somewhat longer, with the partial components of the mysterious GDP calculation so far pointing to a positive number rather than a second successive quarter of contraction.

A few important pieces of the puzzle will be released ahead of Wednesday's fourth quarter GDP numbers.

Net exports (Tuesday) should contribute rather than detract from growth this time.

Stronger company profits (Monday) — kicked higher by miners and surging commodity prices — will also help, while government spending (Tuesday) is forecast to be flat and not much of a factor either way.

The consensus from market economists is for 0.7 per cent growth over the quarter, or 1.9 per cent annualised — just a tick below the Reserve Bank's forecast for this time of the year.

There are a couple of other bits of data worth looking at as well, even though they do not feed into the GDP result.

Banks throttle back on investor lending

The Reserve Bank will table its credit report for January (Tuesday), with the focus firmly on lending for property.

Philip Lowe airs Australia's dirty laundry in Cananda, either venting out of frustration or being a master of strategy, writes Carrington Clarke.

A rebound in investor mortgages in December prompted a blunt warning from the banking regulator, APRA, that lenders caught exceeding the 10 per cent growth speed limit would be weighed down with heavier capital requirements.

A number of banks — most notably Commonwealth and its subsidiary Bankwest — have subsequently throttled back on investor lending.

The RBA data may give an idea whether more regulatory strong-arm tactics are needed.

Evidence the speculative side property is cooling may be found in the Bureau of Statistics building approvals data for January (Thursday).

A sharp decline in apartment approvals pulled down the number of permits issued in December.

That trend is expected to continue, with the consensus forecast for a drop in excess of 10 per cent on this time last year.

January's trade data (Thursday) should confirm the extraordinary turnaround in fortunes for Australia's exporters, most notably the miners.

Massive deficits are so last year, with forecasts of another record surplus in the order of $3.8 billion, eclipsing the previous mark of $3.5 billion nailed just a month ago.

President Trump's legislative program

From a global perspective, the big event of the week will be Mr Trump's address to a joint sitting of Congress (Wednesday) where some detail should be put on the bare bones of existing policy statements and tweets.

Mr Trump promised some "really big news" on tax was imminent, and this may be the venue to drop it.

It is fair to say the markets are not priced for disappointment.

Analysts say the US President's swearing in of several oil leaders gives his administration a pro-petroleum bias that may hurt Australia.

The key benchmark, the S&P 500, has risen around 10 per cent since the November election, spurred on by hopes of big tax cuts and an ambitious spending program.

Most indices are trading at around record highs and are expensive compared to historical averages.

Treasury Secretary Steven Mnuchin has attempted to hose down expectations, saying it is likely policy changes will not have much of an effect this year.

That is not exactly what big investors want to hear.

"The one thing that could stall this rally would be any sort of indication that we won't see the bulk of the effects this year," Bruce McCain, chief investment strategist at Key Private Bank, told the Reuters news agency.

"I think that would take some of the air out of the enthusiasm."

RidgeWorth Investments' Alan Gayle was prepared to put a value on a disappointing speech, or one that only repeats vague outlines.

"If the market begins to doubt Trump's ability to follow through on his promises, then I would think that we would see a 5 per cent market correction fairly easily," Mr Gayle said.

Reporting season wraps up

The last few results of the February reporting season are posted this week with QBE, Lend Lease and Harvey Norman heading the list.

Last week's results frenzy took some sifting through, and there was a bit for both bears and bulls.

"We are almost done, now 96 per cent of the way through reporting season, and it was a lot more action-packed this week with some big moves in the share prices," director on Citi's equity desk Karen Jorritsma said.

"Overall, it was a mixed bag with 45 per cent of results coming in line, 26 per cent beating and 29 per cent softer at the earnings per share line."

Dividends were mostly in line with expectations and the market dropped about 1 per cent over the week.

"Cost cutting is still a big factor, but we are seeing a return to revenue growth in some sectors, so that's a positive," Ms Jorritsma noted.

Topics: business-economics-and-finance, markets, stockmarket, corporate-governance, australia, united-states