A messy week last week for share markets here and offshore, and the monthly data dump from China will ensure something of a repeat this week.
Yesterday’s Chinese trade figures for April will not provide any optimism for investors – exports down by more than expected and imports again weak, despite the continuing high level of iron ore imports.
That and the biggest weekly fall for iron ore in seven years last week will concentrate the minds of local investors this morning
Our market was up 0.8% last week and looks like starting with a 20 point gain this morning, so long investors take the latest Chinese trade figures in their stride.
The Aussie dollar will however start sharply lower – well under 74 US cents at 73.66, and off more than 3% in the past week.
The US dollar was a touch firmer, and oil prices bounced higher amid reports of the bushfires from the Canadian oil producing province of Alberta.
Local investors had better start focusing on the rapid sell off in iron ore in China where prices fell 12% last week to just over $US58 a tonne.
That was the biggest weekly fall since 2009 and came as the impact of the crackdown on Chinese speculators hit home.
It was a much larger fall than in the value of the Aussie currency, so watch for the Australian shares of BHP Billiton, Rio Tinto and Fortescue Metals Group to come under pressure today.
Last week also saw Japanese shares down 3.4%, Eurozone shares down 2.6%, Chinese shares down 0.9% and US shares off 0.4%, with Nasdaq remaining under pressure because of weak tech stock reports.
The RBA’s rate cut and an implicit easing bias in its Statement on Monetary Policy on Friday were the major factors here last week (certainly not the budget) and the selloff in iron ore, and some other commodities should be watched closely for any knock-on impact on local companies.
Australian shares rose 0.2% on Friday, Eurozone shares lost 0.1%, but the US S&P 500 gained 0.3% as the soft April payroll result in the US could delay any further Fed tightening.
Wall Street rebounded in late trading after spending much of the session in the red, as investors grappled with the weak jobs report and fallout on the Fed’s monetary policy.
Despite the small gain, the markets booked their second consecutive weekly losses.
Friday night’s Labor Department came in short of forecasts for around 200,000 new jobs and the 160,000 added in April was also undermined by 19,000 jobs being cut from the figures for February and March.
As a result, the S&P 500 rose 6.51 points, or 0.3%, to 2,057.14, but lost 0.4% over the week.
The Dow jumped 79.92 points, or 0.5%, to 17,740.63, but suffered a 0.2% weekly loss.
The S&P 500 ended the week up 0.6% for 2016 so far, while the Dow is up 1.8% so far this year.
The Nasdaq Composite added 19.06 points, or 0.4% to 4,736.16, ending the week 0.8% lower. For the year so far it is off 5.4% and you can blame the likes of Apple.
European stock markets ended a choppy session mostly lower on Friday, in the wake of the weak US jobs report
The Stoxx Europe 600 fell 0.4% to close at 331.67, ending down 2.6% for the week.
Thanks to the RBA’s rate cut, Australian shares managed a fourth successive week of gains last week.
The four major bank profit reports had little impact in the end – the big influence last week was the rate cut and the RBA cutting its inflation forecast to around 1% to 1.5% this year – well under its target range.
That has set up a lot of questions about the health and strength of growth for the rest of this year and made the budget academic.
