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What mattered last week and a preview of the week ahead

What mattered last week:

  • A torrid week for markets as concerns around the impact of the coronavirus intensified in line with the rapid spread of the Covid-19 virus outside of China.
  • As well as oil producers failing to agree on a new deal after Russia blocked OPEC’s plans to cut supply cut, prompting a price war.
  • Just 4 weeks after trading at all-time highs, last week’s falls resulted in key equity markets falling into bear market territory.
  • The selling was not confined to equities. Safe-haven assets also came under pressure as funds reduced risk across the board.
  • Yields on U.S. bonds rose while gold fell over -8% from recent highs to below $1530.
  • Crude oil futures finished the week below $U.S. 32.00/bbl down over -23% while Bitcoin fell over -50% at one stage before settling near $5000.
  • Locally, the ASX200 finished the week down 14% for the week, although it could have been much worse as a 13% rally on Friday afternoon, helped the index recover lost ground.
  • In FX, the AUDUSD fell over -6% to close below .6200c and to within eyesight of the GFC .6007 low.

For the week ahead, the key events are:

Australia: RBA meeting minutes, house price index (Tuesday), Westpac leading index (Wednesday).

  • RBA meeting minutes (Tuesday): The RBA minutes will communicate a strong easing bias but the minutes have been partially outdated following the events of the past week including fractured markets, active central banks and fiscal stimulus from the Federal Government.

New Zealand: Global dairy trade auction (Tuesday), current account (Wednesday), GDP Q4 (Thursday).

China: Fixed asset investment, industrial production and retail sales (Monday), Loan Prime Rate (Friday).

Japan: Machinery orders (Monday), Reuters Tankan index, capacity utilization (Tuesday), balance of trade (Wednesday), CPI and BOJ interest rate meeting (Thursday).

U.S: Retail sales (Tuesday), industrial production, capacity utilisation, building permits, housing starts(Wednesday), FOMC interest rate meeting (Thursday), existing home sales (Friday).

  • FOMC interest rate meeting (Thursday): After the Federal Reserve cut the benchmark rate to 0-0.25% this morning and launched a U.S $700bn QE plan, the FOMC meeting should be a far less interesting affair.

Canada: CPI (Wednesday), retails sales (Friday).

  • Retail Sales (Friday): After stagnating in the second half of 2019, the market is looking for a small rise of +0.1% in January.

Euro Area: German and EA ZEW economic survey (Tuesday), EA balance of trade (Wednesday), German PPI and EA current account (Friday).

UK: Employment (Tuesday).

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