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8@eight: ASX set to rise; $A hit hard

The S&P500 held-up stronger, rallying into the close of Wall Street trade on Friday night, to close flat for the session. However, the tech-heavy NASDAQ recorded a fall of 0.87 per cent, as traders positioned for the risk the next stage of US-China hostilities would target the information technology sector.

3. US jobs data provides some relief to investors: US stocks also managed to stage a comeback in US trade, courtesy of what was a stronger than expected print of US Non-Farm Payrolls data on Friday night. The data revealed the US economy added 1.7 million jobs last month, solidly above the forecast of 1.5 million, and that the US unemployment rate declined to 10.2 per cent, from 11.1 per cent the month prior.

The data allayed some level of concern that the US economic recovery was stalling, amid recent signs of slowing momentum in the labour market, and softening consumer sentiment.

4. The US Dollar stages a recovery, AUD and gold tumble: The combination of heightened trade-war risks, along with a strong set of US jobs numbers supported a broad-based rally in the greenback on Friday. The US Dollar Index climbed 0.6 per cent, to arrest some of its recent decline.

The Australian Dollar and Kiwi Dollar were hit hardest by the stronger Dollar, falling 1.1 and 1.2 per cent respectively during Friday’s trade. The EUR/USD also retraced a share of its recent rally, shedding 0.75 per cent, while Gold prices also tumbled in excess of 1 per cent.

5. RBA paints a slightly downbeat picture of the economy: Local trade was fixated on the RBA’s Statement on Monetary Policy on Friday. Although the market reaction proved limited, the document provided a materially different view from the RBA on the outlook for the Australian economy.

The RBA’s latest projections suggest the recession will be shallower, but the recovery will be much slower, than previously imagined. The key risk to the outlook remained the evolving second-wave of infections within the country, and whether the economy can stay on a steady path to re-opening.

6. ASX200 set to open higher, after a positive week’s trade: The ASX200 found itself caught in the risk-off sentiment that swept Asian markets on Friday. The index closed 0.6 per cent lower for the session, paced by losses in the materials sector.

The day’s trade capped off what was an otherwise positive week for the ASX200, with the index gaining 1.3 per cent, largely courtesy of broad-strength in commodity prices throughout the week. The market is readying for a small recovery after Friday’s trade now. SPI Futures are pointing to a 0.7 per cent jump for the AS200 at the open.

7. The week ahead: earnings, local jobs and the US consumer: It shapes as another busy week for global markets this week. US earnings season continues, but begins to wind down, with the reporting period to date proving an overall positive one.

Local reporting season will pick-up, with the CBA highlighting the calendar this week. From a macro-perspective, local jobs figures are released on Thursday, with the unemployment rate tipped to climb to 7.8 per cent. Globally, the RBNZ will hand down its interest rate decision, and CPI and Retail Sales numbers will be published in the US.

8. Market watch:

ASX futures up 42 points to 6014 at 6.59am AEST

  • AUD at 71.58 US cents at 5.11am AEST
  • On Wall St: Dow +0.2% S&P 500 +0.1% Nasdaq -0.9%
  • Spot gold -1.4% to $US2035.55 an ounce
  • Brent crude -1.5% to $US44.40 a barrel
  • US oil -1.7% to $US41.22 a barrel
  • Iron ore -1.7% to $US119.21 a tonne
  • 10-year yield: US 0.56% Australia 0.82% Germany -0.51%

This column was produced in commercial partnership between The Sydney Morning Herald, The Age and IG

Information is of a general nature only.

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