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What mattered last week and a preview of the week ahead

What mattered last week:

  • The benchmark U.S. stock index, the S&P 500 gained over +3% last week on optimism that the coronavirus outbreak will be contained and as Chinese authorities stepped in to provide support for the economy.
  • Better than expected U.S. economic data including ISM manufacturing and non-manufacturing surveys and jobs data for January also boosted sentiment.
  • As did an announcement that China will cut tariffs on $75 billion of U.S. goods as part of the phase one trade agreement, effective February 14.
  • After its re-open from the Lunar New Year holiday break, the Shanghai composite initially fell over -8%, before clawing back to finish the week approximately -3.5% lower.
  • A mixed week for safe have assets with gold and the Japanese Yen closing the week lower. However, Bitcoin was up over +7% for the week at the time of writing, following an +8% gain the previous week.
  • Locally, the ASX200 closed the week unchanged near 7000, as hawkish rhetoric from the RBA and concerns over the Australian economy's close ties with China impacted.
  • In FX, upbeat U.S. economic data propelled the U.S. dollar index, the DXY to 4-month highs.

For the week ahead, the key events are:

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

  • NAB business confidence (Tuesday): Currently at its lowest level since July 2013, business confidence is expected to fall again in response to the bushfires and coronavirus.

December half earnings season continues with reports from companies including JB HiFi, CSL, CBA, IAG, JB HiFi and Telstra.

New Zealand: RBNZ interest rate decision (Wednesday), business NZ PMI (Friday).

  • RBNZ interest rate decision (Wednesday): The RBNZ is expected to keep the overnight cash rate (OCR) on hold at 1.00% and maintain an easing bias to allow for the impact of the coronavirus on the NZ economy.

China: CPI and PPI (Monday), new yuan loans, total social financing (Friday).

Japan: Current account (Monday).

U.S.: NFIB business optimism survey and Jolts job openings (Tuesday), CPI (Thursday), retail sales, industrial production, capacity utilisation (Friday).

  • CPI (Friday): Headline CPI is expected to rise slightly to 2.4% y/y while core CPI is expected to fall marginally to 2.2% y/y.

December quarter earnings season continues with reports due this week from companies including Cisco and PepsiCo

Canada: Housing starts and building permits (Monday).

Euro Area: EA industrial production (Tuesday), German Q4 flash GDP and EA employment (Friday).

UK:Balance of trade, GDP, industrial production, (Tuesday).

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