What mattered last week and a preview of the week ahead 7th October

What mattered last week:

  • U.S. stocks closed lower for a third straight week as the Institute of Supply Management (ISM) gauge fell further into contractionary territory flaming recessionary fears.
  • Prompting a partial recovery in stock prices, the latest U.S. jobs report showed the unemployment rate hit a 50 year low of 3.5%.
  • As well as optimism ahead of this week’s U.S. – China trade talks that a “mini deal” will be agreed that includes new tariffs being postponed indefinitely and some Chinese structural reforms.
  • The disappointing ISM number increased expectations the FOMC will cut rates at the end of October, providing support for stocks.
  • As expected, the RBA cut interest rates for the third time in 2019 to a new all-time low of 0.75%.
  • The AUDUSD made a new cycle low of .6671 before recovering almost 1c to close the week at .6770.
  • A tough week for the ASX 200 closing almost 3% lower as growth fears and the RBA rate cut impacted both financial and resource stocks.

For the week ahead, the key events are:

Australia: NAB business confidence (Tuesday), Westpac consumer confidence, housing finance (Thursday).

  • NAB business confidence (Tuesday): Is expected to print at +2, well below the long term average of +6 reflecting soft business conditions and low confidence in the economy.

New Zealand: Business NZ PMI (Friday).

China: Caixin services and composite PMI, foreign exchange reserves (Tuesday).

Japan: Current account (Tuesday), machine tool orders (Wednesday), Reuters Tankan index, machinery orders, PPI (Thursday).

U.S.: PPI (Tuesday), Jolts job openings, FOMC meeting minutes, CPI, U.S. - China trade talks (Thursday), U.S. – China trade talks (Friday).

  • FOMC meeting minutes: The minutes from the Feds last meeting will keep open the prospect of a follow-up rate cut on October 31, currently 85% priced in.

A host of Fed speakers are scheduled to speak this week including, George, Kashkari, Mester, Kaplan, Rosengren as well as Fed Chairman Powell on Thursday.

Canada: Housing starts, building permits (Tuesday), employment (Friday).

Euro Area: German factory orders (Monday), German industrial production (Tuesday), German balance of trade and current account (Thursday).

UK: Halifax house price index (Monday), balance of trade, GDP and industrial production (Friday).


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