[VIDEO] What mattered last week and a preview of the week ahead

Charts (3)


What mattered last week:

  • The S&P500 closed the week flat at 3215, just 5% below all-time highs.
  • Positive news regarding vaccine development and approval of the EU recovery fund in the early part of the week was undermined by rising Covid-19 cases and U.S- China tensions.   
  • Possibly also weighing, profit-taking ahead of earnings reports this week from key “FAANG” stocks.
  • The EU leaders reached an agreement for the EU Recovery Fund, a massive fund to help the EU regions worst hit by the coronavirus.   
  • Volatility, as measured by the VIX index, closed unchanged at 25.8.
  • U.S. 10-year yields closed lower near 0.59%.
  • Seven straight weeks of gains for gold as it closed over 5% higher, above U.S $1900.
  • Crude oil closed 1.30% higher, at U.S $41.29/bbl.
  • The ASX200 finished flat at 6024, unable to break the magnetic like hold of the psychologically important 6000 area.
  • In FX, the AUDUSD closed above 7100c for the first time since April 2019 as the U.S. dollar broker lower.

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: Q2 CPI (Wednesday), building permits, export and import prices (Thursday), PPI, and private sector credit (Friday).

  • Q2 CPI (Wednesday): Free childcare and a 20% fall in fuel prices are likely to result in a -2% fall in the headline inflation rate. Downside price pressures will also be evident in core inflation which is expected to rise by only 0.1% q/q and result in the y/y rate falling to 1.4%.

New Zealand: Building permits, ANZ business confidence (Thursday), ANZ Roy Morgan consumer confidence (Friday).

China: Industrial profits (Monday), NBS manufacturing, and non-manufacturing PMI’s (Friday).

Japan: Retail sales (Thursday), employment (Friday).

U.S: Durable goods, (Monday), S&P Case-Shiller Home price index, CB consumer confidence (Tuesday), pending home sales (Wednesday), FOMC, jobless claims, and Q2 GDP (Thursday), core PCE price index (Friday).

  • FOMC (Thursday): The Fed is likely to keep monetary policy unchanged, remain dovish and reiterate that it is prepared to do more if needed. There is talk the Fed is considering moving to an outcome-based approach to accommodation. This means it would outline how the economy would need to evolve for it to make future adjustments to policy.

June quarter earnings will continue this week with reports from companies including Apple, Amazon, Alphabet and Facebook.

Canada: GDP (Friday).

Euro Area: German Ifo business survey (Monday), German Q2 GDP, employment and CPI as well as EA employment (Thursday), German retail sales, and EA Q2 GDP (Friday).

  • EA Q2 GDP (Friday): After falling -3.6% in Q1, GDP is expected to fall again in Q2 by -11.3%. This will be the largest ever contraction on record, thanks to the Covid-19 lockdowns that ran from mid-March into early May.

UK: Noting of note.

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