A review of the week past and the week ahead

Charts (5)

What mattered last week:

  • The S&P500 fell -2.75%, as the correction in tech stocks deepened and spread to other sectors.
  • The FANG index, a $US120 trillion equal dollar weighted index comprised of high growth tech stocks including Facebook, Apple, Amazon and Google has fallen 15% in September, it largest pullback since March.
  • New coronavirus cases continued to trend lower in the U.S, and Australia. However cases in India and Europe are rising, particularly in Spain and France.
  • Brexit risks remerged and in the U.S, the Democrats blocked the latest stimulus package.
  • The ECB kept policy unchanged at its monthly meeting and did not push back against EURUSD strength.
  • The Band of Canada kept policy unchanged, as well as its GoC bond purchase commitment of a minimum C$5bn per week.
  • Volatility, as measured by the VIX index, closed lower at 26.9.
  • U.S. 10-year yields closed lower, near 0.66%.
  • Gold rose slightly to U.S $1940.00.
  • Crude oil fell another 6.14%, closing at U.S $37.33/bbl.
  • The ASX200 closed down -1.12% at 5859.4.
  • In FX, the AUDUSD closed unchanged near .7280.

For the week ahead, the key events are:

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

  • Labour Force (Thursday): Despite the Victorian lockdowns, weekly payroll data suggest strength in other states will see a rise in jobs of 40,000. Nevertheless, a rise in the participation rate should result in an increase in the unemployment rate, from 7.5% to 7.7%.

New Zealand: Westpac consumer confidence Q3 (Monday), global dairy trade auction (Tuesday), current account (Wednesday), Q2 GDP (Thursday).

China: Unemployment, fixed asset investment, industrial production, retail sales (Tuesday).  

Japan: Reuters Tankan index, Liberal Democratic Party leadership vote (Monday), balance of trade (Wednesday), BoJ interest rate decision (Thursday), CPI (Friday).

U.S: Retail sales (Wednesday), FOMC meeting, housing starts, building permits, jobless claims (Thursday), current account (Friday).

  • FOMC Meeting (Thursday): Following Fed Chair Powell’s speech at the Jackson Hole Symposium, the message is expected to remain one of caution and likely to contain more details on the Feds forward-guidance as well as its willingness to let inflation run above 2%.

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

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

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

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