The Aussie dollar will come under more pressure today after losing three cents last week to touch six months lows, thanks to the weak production and investment data from China at the weekend, on top of the continuing strength of the US dollar ahead of the Federal Reserve meeting and the vote on Scottish independence.
As a result, sharemarkets, commodity prices and bond markets will struggle to remain in positive territory this week, especially in Australia where the shares of the big miners and banks will face more downward pressure.
In the face of continuing strength of the US dollar, the Aussie dollar fell over the week to end at 90.38 USc early Saturday morning, having come close to falling through the 90c level during trading on Friday night.
The US dollar’s strength again helped make a mess of commodity prices, with gold and oil suffering losses for yet another week.
Sharemarkets mostly pulled back last week as worries about the Fed, the Scottish vote, the rising greenback, talk of tougher capital requirements for US banks and new trade sanctions over Ukraine hit sentiment.
Japanese shares were an exception globally with the fall in the yen to a six year low boosting confidence about exports and a rebound in economic growth.
As a result, Japanese shares rose by around 1.8% last week.
US shares fell 1.1%, the first fall for five weeks; Eurozone shares fell 1.2% and Chinese shares rose 0.2%.
UK shares were up 0.1%, despite growing fears about the Scottish vote being a ‘yes’ in favour of independence.
Australian shares fell 1.2% on the back of the weak US lead and falling iron ore prices.
Bond yields rose though, on the back of those Fed concerns and worries about UK gilts ahead of the Scottish vote on Thursday night, our time
That vote is the one event that bears watching closely. It is the biggest imponderable for markets to come to terms with since the eurozone crisis.
A ‘no’ vote for Scotland to remain in the union will see a surge in the value of the pound, the London stockmarket and in currencies such as the Aussie dollar.
A ‘ yes’ vote will see a sell-off and chaos in markets, especially in bond yields and the prices of bank stocks in London (watch the NAB here in Australia with its Clydesdale Bank in Scotland).
Looking at how the markets ended in New York, the Dow fell 61.49 points or 0.36% on Friday to end at 16,987.51, the S&P 500 lost 11.91 points or 0.6% to 1,985.54 and the Nasdaq dropped 24.21 points or 0.53%,to 4,567.60.
For the week, the Dow lost 0.9%, the S&P 500 was off 1.1% and Nasdaq shed 0.3%.
After its new iPhone launch earlier in the week, Apple closed up 0.2% on Friday at $US101.66.
The stock is up 3.7% since last Tuesday when it unveiled the new iPhone 6 and iPhone 6 plus smartphones. The S&P 500 has lost 0.1% during that time.
In Australia, the market will start soft after Wall Street’s fall last week and the share price futures market has a fall of around 20 points pencilled in.
The ASX 200 Index lost 1.2% last week to close at 5531, its third consecutive weekly loss.
On Friday, the ASX 200 shed 0.3%, with the big four banks and Telstra leading the losses.
The Commonwealth Bank of Australia lost 1.3% to $80.23, while Westpac Banking Corporation dropped 1.5% to $34.25. The ANZ also lost 1.5% to $32.83, and National Australia Bank fell 0.5% to $34.25.
Telstra dropped 1.8% to $5.54.
BHP Billiton added 0.4% to $35.79, while Rio Tinto rose 1% to $61.89.
And department store operator Myer was the worst-performing stock of the week, slumping 16.5% to 2.02¢ after the weak result and lowered dividend were announced on Thursday.
