A review of the week past and the week ahead

Charts (5)

What mattered last week:

  • The S&P500 fell -2.50% as traders moved to lock in profits in tech shares following their strong rally from the March lows.
  • New coronavirus cases again trended lower in the U.S, Japan, and Australia, offset by a rise in new cases in Europe.
  • Key U.S. economic data was better than expected including ISM manufacturing and the unemployment rate falling to 8.4%.
  • The odds of President Trump winning the U.S. Presidential election continued to improve.
  • Volatility, as measured by the VIX index, closed higher at 30.8%.
  • U.S. 10-year yields closed mostly unchanged near 0.72%.
  • Gold fell $30 to close near U.S $1934.00
  • Crude oil closed -7.50% lower, at U.S $39.77/bbl.
  • The ASX200 closed down -2.44% at 5925.5.
  • In FX, the AUDUSD closed near .7280 after trading above .7400c earlier in the week for the first time since August 2018.

For the week ahead, the key events are:

Australia: NAB business confidence (Tuesday), Westpac consumer confidence, housing finance (Wednesday).

  • NAB business confidence (Tuesday): NAB business confidence plunged from 0 to -14 in July and is expected to fall to -22 in August due to the Victorian lockdown.

New Zealand: Manufacturing sales (Wednesday), business NZ PMI (Friday).

China: Balance of trade (Monday), CPI, and PPI (Wednesday), new yuan loans, total social financing, M2 money supply (Friday).

Japan: Current account (Tuesday), machine tool orders (Wednesday), machinery orders (Thursday).  

U.S: NFIB business confidence (Tuesday), jobless claims, and PPI (Thursday), CPI (Friday).

Canada: Housing starts (Wednesday), BoC interest rate meeting (Thursday).

  • BoC interest rate meeting (Wednesday): The BoC is expected to keep the overnight rate on hold at 0.25% and maintain its GoC bond purchase commitment of a minimum C$5bn per week.

Euro Area: German industrial production (Monday), German balance of trade, and current account (Tuesday), ECB interest rate meeting (Thursday), German inflation (Friday).

  • ECB interest rate meeting (Thursday): After expanding the size of the PEPP program in June and extending the length of the program to June 2021 the ECB is expected to keep monetary policy unchanged this week to allow time to assess “incoming data”.

UK: Halifax housing price index (Monday), balance of trade, industrial production, GDP (Friday).

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