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Australian Market Preview 20 July | ThinkMarkets | AU
A snapshot of overnight moves and a look to the upcoming Australasian session for 20 July. The net result? Major US indices were barely changed. The tech-heavy Nasdaq and the benchmark S&P500 were each 0.28% higher, whilst the Dow Jones Industrial Index edged 0.23% lower. The so-called ‘fear gauge’, the volatility index (VIX), fell 8.3%,…
A snapshot of overnight moves and a look to the upcoming Australasian session for 20 July.
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The net result? Major US indices were barely changed. The tech-heavy Nasdaq and the benchmark S&P500 were each 0.28% higher, whilst the Dow Jones Industrial Index edged 0.23% lower. The so-called ‘fear gauge’, the volatility index (VIX), fell 8.3%, demonstrating investors’ nerves were on the mend.
Confirmed daily cases of covid-19 spiked above 70k per day. Daily cases remain in an upward trend, which in terms of raw numbers, is as bad as it has been since the start of the crisis.
Compounding the poor news on the covid-19 front, a University of Michigan survey showed that confidence among US consumers had fallen in July. During the month most US states had slowed, and in some cases, rolled back pandemic-induced lock downs. As a result, consumers felt less confident in both their current and future economic outlooks (more in this and other data in the Macro Economy section below).
Metals prices on the LME were generally lower. Only Copper (+0.48%) and Steel Rebar (+0.12%) saw gains, whilst Nickel (-2.1%) and Zinc (-1.6%) paced the losers.
Iron ore prices softened for the second straight session, falling 0.55% on the Chinese Dalian exchange, and 0.16% on the Singapore based $US contract.
Gold recovered 0.69%, with spot gold now trading at US$1812.00 an ounce. This is its best level since September 2011.
Crude oil dipped 0.4% in a narrow but choppy trading range, whilst Brent Crude lost 0.67%, and Natural Gas was down 0.94%.
The ASX200 Share Price Index closed the Friday evening session at 6004, compared to a high of 6018 and a low of 5977. That’s a 30 point discount to Friday’s ASX 200 close of 6034. Given the SPI has been trading at roughly a 20-30 point discount lately, this implies that the ASX 200 should trade roughly flat at the open.
AU Companies
Macro Economy
It will be a quiet day on the economic data front Monday. Below is a brief summary of the key macroeconomic data developments for the last 24 hours.
USA
US building permits increased by 2.1% in June to 1.24m per annum. This was slightly worse than the 1.29m permits markets were expecting. Permits are still 2.5% below the same time last year.
In contrast, housing starts were an impressive 17.3% higher in June compared to May, slightly ahead of market expectations. Despite the large gain in June, which reflects a resumption in the home building industry after covid-19 related shutdowns, housing starts remain 4% below the same time last year.
The University of Michigan’s latest survey of US consumers showed a drop in confidence in July. The Consumer Sentiment Index fell to 73.2 compared to 78.1 in June. This was well below market expectation of a 79 print.
The Current Economic Conditions Index dropped to 84.2 from 87.1, and even more concerning, the Index of Consumer Expectations worsened to 66.2 from 72.3.
According to Richard Curtin, the survey’s Chief Economist, “financial relief is clearly needed for the most vulnerable households, [but] that relief will not stimulate the extent of renewed consumer spending necessary to restore employment and income to pre-crisis levels anytime soon.”