A review of the week past and the week ahead

Charts (3)

What mattered last week:

  • The S&P500 fell for a fourth straight week, closing down -0.9%.  
  • The fall a result of deleveraging as the pace of the economic recovery slows and fading hopes that a 4th U.S. stimulus package will be agreed before the U.S. election.
  • The possibility of a contested U.S. Presidential election continues to overshadow markets.
  • As well as concerns that tightening of social distance restrictions in Europe and the UK will weigh on economic growth, highlighted by a drop in last week’s Eurozone PMI’s.
  • Volatility, as measured by the VIX index, closed firmer at 26.4.
  • U.S. 10-year yields closed lower near 0.66%.
  • Gold fell -4.5% to near $1861.00.
  • Crude oil fell -2.59% to U.S $40.325/bbl.
  • The ASX200 closed 1.70% higher at 5964.9 led by big banks following a relaxation of responsible lending laws.
  • In FX, the AUDUSD fell -3.57% to near .7030, giving back most of its gains since early July.

For the week ahead, the key events are:

Australia: Building approvals, private sector credit (Wednesday), retail sales (Friday).

  • Retail Sales (Friday): As a result of the lockdown in Victoria, the data on Friday is expected to confirm a fall of -4.2%.

New Zealand: Building permits, ANZ, business confidence (Wednesday), ANZ Roy Morgan consumer confidence (Friday).

China: NBS manufacturing and non-manufacturing PMI and Caixin manufacturing PMI (Wednesday), Caixin service, and composite PMI (Friday).

Japan: Industrial production and retail sales (Wednesday), Tankan business conditions survey (Thursday), employment (Friday).

U.S: Consumer confidence (Tuesday), pending home sales, the first U.S. Presidential debate of 2020 (Wednesday), personal income, personal spending, jobless claims, core PCE and ISM (Thursday), employment (Friday).

  • Employment (Friday): A gain of about 900k jobs is expected in September and for the unemployment rate to fall again, from 8.4% to 8.2%.

Canada: GDP July (Wednesday), building permits, and Markit Manufacturing PMI (Thursday).

Euro Area: German inflation (Tuesday), German retail sales, employment and retail sales (Wednesday), EA employment (Thursday), EA inflation (Friday).

UK:Mortgage approvals (Tuesday), current account (Wednesday).

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