The ASX is heading for a weak opening this morning, despite Friday’s solid finish on Wall Street which shrugged off a higher inflation reading in the Federal Reserve’s favoured measure.
Australian investors will be keeping a close watch on the new Sydney lockdown and the possible damage it could do jobs, growth, retail sales and the like if it goes longer than a month.
The coming week will see the usual end of month, quarter, and in the case of Australia, end of financial year (and June half) for thousands of companies, governments, as well as investors large and small.
The ASX overnight futures were up just five points at the close early Saturday morning, Sydney time. That was after a half a per cent rise on Friday but a fall of 0.8% rise over the week to Friday’s close of 7,308. That was the first losing week since the middle of May.
Iron ore was mixed, but gained on the week, oil was up, gold and copper had a similar experience; the Aussie dollar ended Friday’s session around 76 US cents, up more than a cent on the previous week and US bond yields kicked higher in the wake of the rise in what’s called PCE inflation (or prices measures by the Person Consumption Expenditure Index, the prices measure favoured by the Fed).
Personal consumption expenditures data showed a measure of underlying inflation rose less than expected in May. Core PCE rose 3.4% year-over-year, above the Fed’s 2% flexible target, but less than forecasts as high of 3.9%. Month on month PCE prices were up 0.5% instead of the forecast 0.6%.
The US dollar eased after the data was released and the 10-year bond yield jumped to just over 1.53% from 1.49% on Thursday and 1.428% the preceding Friday.
Wall Street this week will be dominated by a series of announcements after 6am Tuesday from the Fed signing off on tens of billions of buybacks and higher dividends for many of the 23 biggest banks in the US.
Foreign banks like HSBC and BNP, Credit Suisse and UBS will not be directly impacted, but giants like JPMorgan, Goldman Sachs, Wells Fargo and Bank of America will.
…………
On Wall Street, Friday saw the S&P 500 index close at a record while global shares also finished at an all-time high
Besides the weaker-than-expected inflation data, news that President Biden had secured a huge bipartisan infrastructure agreement boosted a host of stocks.
The plan is valued at $US1.2 trillion over eight years, of which $US579 billion is new spending.
The Dow rose 0.71% on Friday to end at 34,438.58 points, while the S&P 500 was up 0.34%. Nasdaq eased 0.06% after holding near the previous session’s record high.
The Dow did better than the S&P 500 over the week with a 3.4% rise against 2.7%. Nasdaq added 2.3% for the week.
MSCI’s gauge of stocks across the globe closed at a record high of 721.91.
The pan-European STOXX 600 rose 0.13%, ending the week with a gain of 1.2%
Japanese shares added 0.4% and Chinese shares rose 2.7%.
Friday’s weaker-than-expected inflation data eased worries about a sudden tapering in stimulus bond buying by the Federal Reserve, even though 10-year bond yields climbed back over 1.50%.
