A review of the week past and the week ahead

Charts (5)

What mattered last week:

  • The S&P500 fell -2.75%, as the correction in tech stocks deepened and spread to other sectors.
  • The FANG index, a $US120 trillion equal dollar weighted index comprised of high growth tech stocks including Facebook, Apple, Amazon and Google has fallen 15% in September, it largest pullback since March.
  • New coronavirus cases continued to trend lower in the U.S, and Australia. However cases in India and Europe are rising, particularly in Spain and France.
  • Brexit risks remerged and in the U.S, the Democrats blocked the latest stimulus package.
  • The ECB kept policy unchanged at its monthly meeting and did not push back against EURUSD strength.
  • The Band of Canada kept policy unchanged, as well as its GoC bond purchase commitment of a minimum C$5bn per week.
  • Volatility, as measured by the VIX index, closed lower at 26.9.
  • U.S. 10-year yields closed lower, near 0.66%.
  • Gold rose slightly to U.S $1940.00.
  • Crude oil fell another 6.14%, closing at U.S $37.33/bbl.
  • The ASX200 closed down -1.12% at 5859.4.
  • In FX, the AUDUSD closed unchanged near .7280.

For the week ahead, the key events are:

Australia: RBA meeting minutes, house price index (Tuesday), HIA new home sales (Wednesday), labour force (Thursday).

  • Labour Force (Thursday): Despite the Victorian lockdowns, weekly payroll data suggest strength in other states will see a rise in jobs of 40,000. Nevertheless, a rise in the participation rate should result in an increase in the unemployment rate, from 7.5% to 7.7%.

New Zealand: Westpac consumer confidence Q3 (Monday), global dairy trade auction (Tuesday), current account (Wednesday), Q2 GDP (Thursday).

China: Unemployment, fixed asset investment, industrial production, retail sales (Tuesday).  

Japan: Reuters Tankan index, Liberal Democratic Party leadership vote (Monday), balance of trade (Wednesday), BoJ interest rate decision (Thursday), CPI (Friday).

U.S: Retail sales (Wednesday), FOMC meeting, housing starts, building permits, jobless claims (Thursday), current account (Friday).

  • FOMC Meeting (Thursday): Following Fed Chair Powell’s speech at the Jackson Hole Symposium, the message is expected to remain one of caution and likely to contain more details on the Feds forward-guidance as well as its willingness to let inflation run above 2%.

Canada: CPI (Wednesday), retail sales (Friday).

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

UK: Employment (Tuesday), CPI (Wednesday), BoE interest rate meeting (Thursday), retail sales (Friday).

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.