A review of the week past and the week ahead

Charts (3)

What mattered last week:

  • The S&P500 closed the week 0.70% higher, at a new record high, its fast ever recorded recovery from a bear market.
  • Supported by falling new coronavirus cases in the U.S. and as the second wave in the U.S. proves less deadly than the first wave as well as positive vaccine news.
  • Economic data in the U.S was mixed. PMI data rose strongly however the number of Americans filing initial jobless claims rose unexpectedly to 1.1 million.
  • Volatility, as measured by the VIX index, closed mostly unchanged at 22.5.
  • U.S. 10-year yields fell to 0.63%.
  • Gold stabilised near $1940 after a sharp pullback the previous week.
  • Crude oil closed 0.80% higher, at U.S $42.34/bbl.
  • The ASX200 closed at 6111.2, unable to break free of the magnetic pull of 6000 and as the Victorian lockdown continued to weigh.
  • In FX, the AUDUSD closed unchanged near .7160 as the U.S. dollar found some support.

For the week ahead, the key events are:

Australia: Construction work (Wednesday), Q2 Capex (Thursday).

  • Q2 Capex (Thursday): After falling by -1.6% in the March quarter, the expectation is for a -6% fall in the June quarter. For the 3rd estimate of spending FY2020-21, the expectation is for around $96bn, slightly higher than the 2nd estimate which was taken during the peak of the first lockdown.

June reporting season enters its final weeks with reports from companies including Fortescue, Woolworths, and Afterpay (previews available on the City Index website).

New Zealand: Q2 Retail sales (Monday), balance of trade (Wednesday), Roy Morgan consumer confidence (Friday).

China: Industrial profits (Thursday).

Japan: Nothing of note.

U.S: S&P Case-Shiller home price index, consumer confidence, new home sales (Tuesday), durable goods (Wednesday), jobless claims, pending home sales (Thursday), core PCE (Friday).

The 2020 Jackson Hole Economic Policy Symposium “Navigating the Decade Ahead: Implications for Monetary Policy,” will be conducted online, Aug. 27 to Aug. 28.

Canada: Current account (Thursday), Q2 GDP (Friday).

  • Q2 GDP (Friday): Q2 GDP is expected to fall by 38% annualized in Q2, as a result of the lockdowns during the pandemic period. On a more positive note, the monthly GDP number for June is expected to rise by 5% providing a good kick start for Q3.

Euro Area: German IFO (Tuesday), German GFK consumer confidence, EA economic sentiment (Friday).

UK: Nationwide housing prices (Friday).

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