The S&P 500 closed -0.72% lower on Friday, weighed down by energy, industrial, and materials declining by -2.17%, -2.07%, and -1.56% respectively.
The Dow fell by -0.45% while the Nasdaq slipped -0.9% with the VIX little changed at 26.3. This week, key focus will be on the Federal Reserve policy meeting, where a third consecutive 0.75% hike in interest rates is expected. Bob Schwartz from Oxford Economics’ commented that the Fed is expected to continue raising the cash rate,” The Fed is not expected to deviate from its aggressive rate-hiking campaign over the near term. Inflation expectations may be well behaved now, but a few more months of upside surprises on the price front could easily change that. And while the signs indicate that inflation has peaked, the retreat will be slow and erratic.” Consensus by analysts on Wall Street on the performance of sectors lists energy, information technology and real estate to perform better than others. The yield on the US 2-year bond was little changed at 3.86%, while the 10-year and 30-year bonds traded at 3.44% and 3.51 % respectively.
European markets sank on Friday. The Euro STOXX 600 was down -1.28% as all sectors closed lower, except real estate which closed +0.71% higher. Industrials, technology and communications weighed down the index by falling -2.26%, -1.88% and -1.44% respectively. The FTSE, the CAC and the DAX declined by -0.6%, -1.3% and -1.7% respectively. Ahead for the week, investors will be focused on a speech by ECB President Lagarde overnight on Tuesday as well as a rate decision by the Bank of England on Thursday where the central bank is widely expected to raise interest rates by a further +0.50% to 2.25%. The week will be rounded off with Eurozone consumer confidence for September overnight Thursday expected to weaken to -26 from -24.9 in August as well as PMI reports for the region also expected to show a slowdown in both manufacturing and services and the German Ifo Business climate survey for September.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
The ASX is expected to open flat this morning with ASX200 futures down just -2 points or -0.03% to 6,737. The ASX fell -1.52% on Friday in broad-based selling, with energy, materials and industrials being the biggest laggards losing -2.97%, -2.4% and -2.31% respectively. Atlas Arteria saw its share price sink -15.6% after raising capital for acquiring Chicago Skyway. Whitehaven Coal dropped -2.7% after the Biden administration resolved the disputes between US rail workers and rail companies. Mineral Resources dropped by -5.2%, Rio Tinto fell -2.3% and BHP Group declined -1.8%. Investor focus will be on the minutes of the RBAs meeting, to be released on Tuesday. The local currency gained strength against the US dollar rising +0.2% to 67.16. Ahead for the week, the latest policy minutes from the RBA will be released on Tuesday followed by the Westpac leading index for August on Wednesday while Friday will bring the release of September’s PMI reports for manufacturing and services.
News out of China showed encouraging signs with industrial production increasing +5.8% while retail sales rose +5.4%. Oil prices rose with WTI crude and Brent crude both rising by +0.01% and +0.56% to $85.11 and $91.35 respectively. In precious metals, spot gold rose +0.6% to $1,675, spot silver rose +2.17% to $19.59, and SGX Iron Ore declined -2.6% to $US98.45. The price of bitcoin floated remained below the $20k mark at $19,714.
Economic Calendar
• NZ Services (MoM Aug) 08:30
• AUS RBA Kearns Speech 08:10
• China FDI (YTD) (YoY Aug) 17:00
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
