What mattered last week and a preview of the week ahead

Charts (3)

What mattered last week:

  • Strong economic data, vaccine hopes, and more talk of stimulus helped the S&P500 rally another 1.50% last week.
  • Also supported by a 7.5% gain in Chinese stocks following a “bullish” article in the China Securities Journal.
  • Offsetting surging new Covid-19 cases in the U.S, Latin America, and in Australia.   
  • Volatility, as measured by the VIX index, closed marginally lower at 27.3.
  • U.S. 10-year yields closed marginally lower near 0.65%.
  • Gold rallied for a fifth straight week, closing near $1798.
  • Crude oil closed mostly unchanged at U.S. $40.55/bbl.
  • The ASX200 shed 2.30% to close at 5919.2 following Melbourne’s return to lockdown.
  • In FX, the AUDUSD closed the week mostly unchanged at .6950.

For the week ahead, the key events are:

A key focus for traders this week will again be on new Covid-19 cases predominantly in the U.S, Latin America and in Australia.

Australia: NAB business confidence (Tuesday), Westpac consumer confidence (Wednesday), employment (Thursday).

  • Employment (Thursday): The market is looking for an increase of 112k jobs in June. The unemployment rate is expected to rise from 7.1% to 7.4% due to a rebound in the participation rate.

New Zealand: Inflation Q2 (Thursday), business NZ PMI (Friday).

China: Balance of trade (Tuesday), GDP Q2, employment, fixed asset investment, retail sales, industrial production (Thursday).

  • GDP Q2 (Thursday): GDP is expected to grow by 9.6% in the June quarter following a -9.8% decline in the March quarter.

Japan: BoJ interest rate decision (Wednesday).

U.S: CPI (Tuesday), industrial production (Wednesday), retail sales (Thursday), housing starts, and building permits (Friday).

*Fed speakers on the wires this week include Brainard, Bullard, and Williams.

*Companies reporting June quarter earnings this week include JP Morgan, Citigroup, Goldman Sachs, IBM, and Netflix.

Canada: BoC interest rate decision  (Thursday).

Euro Area: German CPI, EA industrial production, EA and German ZEW economic sentiment survey (Tuesday), ECB interest rate meeting (Thursday), EA CPI (Friday).

  • ECB interest rate meeting (Thursday): The ECB meeting is expected to be a non-event this month after the ECB significantly bolstered its quantitative easing program at its last meeting.

UK: Balance of trade, industrial production, GDP (Tuesday), CPI and PPI (Wednesday), employment (Thursday), GFK consumer confidence (Friday).

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