What mattered last week and a preview of the week ahead

Charts (2)

What mattered last week:

  • The S&P500 completed its worst week in almost 3 months, finishing 5% lower on concerns of a second wave of COVID-19 cases in the U.S.
  • As well as a somber appraisal of the economic recovery from Fed Chairman Powell, that appeared to disappoint investors.
  • Despite the Fed Chairman confirming that rates would remain low for an extended period and that he “is not even thinking about raising rates”.
  • As well as expectations of another stimulus package in the U.S.
  • Volatility, as measured by the VIX index, closed 11.6pts higher at 36.1.
  • U.S. 10-year yields closed 19bp lower near 0.71%.
  • Gold rebounded over $45.00 to close above $1730 on safe-haven buying.
  • After six straight weeks of gains, crude oil fell over 8% got the week to close at U.S $36.26/bbl.
  • The ASX200 fell -2.50% to 5847.8, as energy and financial stocks retreated sharply from recent highs.
  • In FX, after failing to sustain the break above .7000c the AUDUSD closed the week near .6850.

For the week ahead, the key events are:

Australia: RBA meeting minutes, house price index (Tuesday), HIA new home sales, Westpac leading index (Wednesday), labour force (Thursday).

  • Labour force (Thursday): Following the re-opening, the market is expecting employment to fall by -60k in May, following the loss of almost 600k in April. The participation rate is expected to lift to 63.7% and the U/R is likely to lift to 6.9%.

New Zealand: Westpac consumer confidence, (Monday), global dairy price auction (Tuesday), Q1 GDP (Thursday).

  • Q1 GDP (Thursday): With the full impact of the COVID-19 lockdown to be realized in Q2, the market is looking for a “modest” fall of -1.3% q/q and 0.0% y/y.

China: House price index, fixed asset investment, industrial production, employment (Monday).

Japan: BoJ interest rate decision (Tuesday), Reuters tankan index, balance of trade (Wednesday), CPI, and BoJ meeting minutes (Friday).

U.S: Retail sales, industrial production (Tuesday), NAHB housing market index, building permits, housing starts (Wednesday), jobless claims (Thursday).

Canada: Inflation (Wednesday), new house price index, wholesale sales, ADP employment (Thursday), Retail sales (Friday).

Euro Area: EA and German ZEW economic sentiment index (Tuesday).

UK: Employment (Tuesday), CPI and PPI (Wednesday), BoE interest rate meeting (Thursday), retail sales (Friday).

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