What mattered last week and a preview of the week ahead 21st October

What mattered last week:

  • U.S. stocks rallied following positive surprises in September quarter earnings reports and a reduction in the tail risks associated with Brexit and U.S. - China trade tensions.
  • Also supporting stocks, weaker than expected U.S. retail sales for September following on from a low CPI number, has increased the probabilities that the Fed cuts rates again next week.
  • Partly offsetting goodwill from the U.S. - China trade truce, the U.S. House passed a bill supporting protesters in Hong Kong.
  • The IMF revised lower its global growth forecast to 3% for 2019 and 3.4% for 2020.
  • Chinese GDP slowed to 6% y/y, the slowest pace since the series began in 1992 and weaker than the consensus forecast of 6.1% y/y.
  • Locally, the AUDUSD closed the week above .6850 aided by better Australian jobs data for September and upbeat comments from RBA Governor Lowe.
  • The ASX 200 closed the week near ~6650, helped higher by gains in the energy, health and the financial sector.

For the week ahead, the key events are:

Australia: Nothing of note.

New Zealand: Balance of trade (Wednesday).

China: House price index (Monday).

Japan: Balance of trade (Monday), Jibun bank PMI’s (Thursday).

U.S.: Existing home sales (Wednesday), house price index, durable goods (Thursday), Markit flash PMI’s, new home sales (Friday).

  • Markit composite PMI (Friday): The expectation is for a modest recovery in the October PMI to 51.6 from 51.00 in September.

September quarter earnings reporting season continues with reports from companies including Microsoft, Amazon, Alphabet (ex-Google), Boeing and 3M.

Canada: Retail sales (Tuesday), wholesale sales (Wednesday).

Euro Area: German PPI (Monday), EA consumer confidence, German and EA Markit PMI’s, ECB interest rate meeting (Thursday), German consumer confidence and IFO (Friday).

  • ECB interest rate meeting (Thursday): The ECB meeting this week is expected to be a nonevent following the significant easing package announced at the ECB’s September meeting.

UK: A vote on PM Johnson’s withdrawal agreement (Monday or Tuesday).


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