What mattered last week and a preview of the week ahead

What mattered last week: The S&P500 and stock markets in general, fell as tensions between the U.S and China increased. Fed Chair Powell delivered a downbeat assessment of the U.S. economy and ruled out negative rates. Two influential hedge fund managers commented that stock markets were overvalued.


What mattered last week:

  • The S&P500 and stock markets in general, fell as tensions between the U.S and China increased.
  • Fed Chair Powell delivered a downbeat assessment of the U.S. economy and ruled out negative rates.
  • Two influential hedge fund managers commented that stock markets were overvalued.
  • Lockdown restrictions in the U.S, Europe, and Australia/New Zealand continued to be eased.
  • Volatility, as measured by the VIX index, closed +3.9 points higher at 31.9.
  • U.S. 10-year yields closed fractionally lower, near 0.65%.
  • Gold resumed its uptrend, closing +2.36% higher, near $1742.50.
  • Crude oil futures rallied strongly for a third consecutive week as demand increased and production fell, closing at $29.52/bbl.
  • The ASX200 closed mostly unchanged near 5400, despite the price of iron ore rallying over 3% to close near $90/tonne.
  • In FX, the AUDUSD fell for the first time in six weeks, closing near .6415.

For the week ahead, the key events are:

The main focus of traders this week will be on progress as countries continue to ease lockdown restrictions and reopen economies.

Australia: RBA meeting minutes (Tuesday), RBA Governor Lowe speech (Thursday).

  • RBA meeting minutes (Tuesday): The minutes are expected to maintain a dovish tone and underscore the RBA’s willingness to support the recovery.

New Zealand: Retail sales Q1 (Friday).

China: Loan Prime Rate meeting (Wednesday).

Japan: Q1 GDP (Monday), Reuters Tankan index, machinery orders (Wednesday), Jibun flash PMI’s (Thursday), inflation (Friday).

U.S: Building permits, housing starts, (Tuesday), FOMC meeting minutes, Markit flash PMI’s, existing home sales (Thursday).

  • FOMC meeting minutes (Thursday): The minutes will follow the dovish tone in Fed Chair Powell’s speech last week.

Fed speakers on the wires this week include Fed Chair Powell, Rosengren, Williams and Brainard.

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

  • Retail sales (Friday): The expectation is for retail sales to plunge by 10.0% in March, the first month of COVID-19 impacted retail sales data.

Euro Area: EA and German ZEW business sentiment surveys, EA consumer confidence (Thursday), EA and German Markit flash business PMI’s (Friday).

  • EA and German Markit flash business PMI’s (Friday): European countries began to ease lockdown restrictions in early May and this is likely to result in a bounce from the extreme low PMI readings of April.

UK: Employment (Tuesday), inflation (Wednesday), Markit flash business PMI’s (Thursday).

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