A review of the week past and the week ahead

Charts (3)

What mattered last week:

  • A 4% gain for the S&P500 as hopes of a stimulus deal increase, either before or after the election if there is a Democrat clean sweep.
  • U.S economic data was mixed. However, the market was more responsive to the better ISM services data, than the decline in job openings.
  • The U.K warned that it would quit Brexit talks unless progress is made this coming week.
  • In Australia, the Federal Budget confirmed another round of spending, taking total fiscal stimulus this financial year to $160bn, above 10% of GDP.
  • Volatility, as measured by the VIX index, closed lower at 25.0.
  • U.S. 10-year yields closed firmer near 0.78%.
  • Gold rallied over 1.65% closing near $1930.
  • Crude oil reclaimed all of the previous week's losses and more to close at $40.60/bbl.
  • The ASX200 had its best week since May, closing 5.35% higher at 6102.2 supported by the Federal Budget and stronger offshore equity markets.
  • In FX, the AUDUSD rose 1.10% to close near .7240 as the U.S. dollar softened.

For the week ahead, the key events are:

Australia: Westpac consumer confidence, HIA new home sales (Wednesday), employment, and a speech by RBA Governor Lowe (Thursday).

  • RBA Governor Lower speech (Thursday): RBA Governor Lowe speaks at the Citi Australia and New Zealand Annual Investment Conference. The market will be looking for confirmation the RBA will cut rates by 15bp to 0.1% at its November meeting.

New Zealand: Business NZ PMI and CPI (Friday), NZ General Election (Saturday).

China: Balance of trade (Tuesday), CPI, new yuan loans, total social financing, M2 money supply (Thursday).

Japan: Reuters Tankan Index (Tuesday).

U.S: CPI (Tuesday), jobless claims (Thursday), retail sales, industrial production, capacity utilization (Friday).

  • Retail Sales (Friday): Headline retail sales are expected to increase by 0.5% in September building on a 0.6% rise in August. The retail sales control group is expected to increase by 0.5% following a small decline in August.

Canada: Nothing of note.

Euro Area: EA and German ZEW economic sentiment index (Tuesday), EA industrial production (Wednesday), EA balance of trade (Friday).

  • European Council (Thursday/Friday): EU leaders will meet in Brussels to discuss topics including the coronavirus and Brexit. The outcome of Brexit negotiations remains highly uncertain and it is debatable that an agreement will be reached this time around.  

UK: Employment (Tuesday).

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