Wall Street ended a mad week confused and directionless as did Australia and, but the coming week is likely to see more confusion about whether economies are too hot, too cold, with inflation looming, along with the hoary old special “Rate Rise Looms” three of the silliest words in economic or business commentary.
Take Friday – bond yields fell in the US and Europe but zoomed higher in Australia, shares in Asia, Europe and most of the US slide/slump; after a big slide on the ASX on Friday and other Asian markets; the Aussie dollar tanks along with gold and oil and yet the ASX futures market shows a 29 point or 0.4% rise for the start of trading Monday.
After Asia’s big slide, Eurozone shares fell 1.2% on Friday and the US S&P 500 fell – 0.5%, despite a slight bounce in Nasdaq tech stocks as US bond yields settled down a bit – falling from a peak on Thursday of 1.61% to 1.41% at Friday’s close – a big swing.
What will help sentiment today is the passing of the Biden $US1.9 trillion stimulus package by the US House of Representatives.
After what we saw on Friday with the ASX 200 down almost 2.4% or more than 160 points and falls offshore, that optimism about the state of the ASX this morning is pretty hard to take. The market lost nearly 1.8% last week but still managed a gain of 1% for February.
For the week US shares fell 2.5%, Eurozone shares lost 2%, Japanese shares fell 3.5% and Chinese shares fell 7.7%.
For the month of February, the Dow was up 3.2%, the S&P 500 was up 2.6% and Nasdaq managed a small gain of 0.9% after last week’s sell down of 4.9% (The Dow lost 1.8%). Europe’s Stoxx 600 index fell 2.4% last week but still gained 2.3% over February. Chinese markets sold off heavily last week but still managed a small gain for the month of 0.75%.
Despite losses on Friday and last week, the Nikkei still managed a 4.7% gain for February, making it one of the best performed markets for the month.
The AMP’s Dr Shane Oliver says that bond yields increased significantly, and US 10 year yields are now up by around 90 basis points in the from last year’s low and by around 130 basis points in Australia, despite some settling on Friday helped by the aggressive RBA bond buying to defend its 0.1% 3 year bond yield target.
Oil, metal and iron ore prices rose over the week which helped briefly push the $A to a three year high at 80.08 US cents before it fell back with share markets and then went further with a 2.8% slide on Friday alone to end just above 77 US cents (and touched a day’s low of 76.92 US cents).
MSCI’s benchmark for global equity markets slid 1.19% to 659.1 despite its large weighting to the US megatechs.
Asia earlier saw the heaviest selling, with MSCI’s broadest index of Asia-Pacific shares outside Japan sliding more than 3% to a one-month low, its steepest one-day percentage loss since the market rout bottomed out in late March last year.
