A review of the week past and the week ahead

Charts (1)

What mattered last week:

  • The S&P500 finished flat last week. reflecting a tug of war between positive economic data vs rising global coronavirus cases and a stalemate over stimulus talks.
  • As well as uncertainty ahead of the U.S. election and a still to be resolved Brexit deal.
  • Locally, the RBA delivered a significant dovish shift to its forward guidance, moving towards an inflation-targeting framework, similar to the Feds.
  • While China upped the ante in its diplomatic spat with Australia by verbally instructing imports of Australian coal and cotton to be halted.
  • In New Zealand, Prime Minister Jacinda Arden won re-election in a landslide result.
  • Volatility, as measured by the VIX index, closed higher at 27.4.
  • U.S. 10-year yields closed firmer near 0.75%.
  • Gold gave back last week’s gains closing -1.62% lower, near $1900.
  • Crude oil closed flat near $41.12/bbl.
  • The ASX200 built on prior week gains closing another 1.22% higher at 6176.8
  • In FX, the AUDUSD closed lower near .7080, impacted by policy changes in China and the dovish tones of the RBA.

For the week ahead, the key events are:

Australia: RBA meeting minutes (Tuesday).

  • RBA meeting minutes (Tuesday): The minutes are expected to be dovish however they are now largely outdated following RBA Governor Lowe’s ultra-dovish speech last week.

New Zealand: NZIER business confidence and global dairy auction (Tuesday), CPI, and balance of trade (Friday).

China: Q3 GDP, employment, fixed asset investment, industrial production, retail sales (Monday).

  • Q3 GDP (Monday): September quarter GDP is expected to rise by 3.2% qoq after an 11.5% qoq rise in the June quarter. This would take annual growth to 5.3% yoy.

Japan: Balance of trade (Monday), CPI, and Jibun manufacturing PMI (Friday).

U.S: Housing starts, housing permits (Tuesday), jobless claims, existing home sales, (Thursday), Markit composite flash PMI (Friday).

Canada: BoC business outlook survey (Monday), CPI, and retail sales (Wednesday).

Euro Area: German GFK consumer confidence (Thursday), German and EA Markit flash PMI’s (Friday).

  • EA Markit Composite Flash PMI’s (Friday): As a result of the rise in new coronavirus cases and a tightening of restrictions, a slight fall is expected from last month's 50.4 print.

UK: CPI (Wednesday), GFK consumer confidence, retail sales, and Markit Flash PMI’s (Friday).

More from Australia

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