Week in Review
Global markets tried to recover ground last week with reports that US President Trump was keen to strike a trade deal with China sometime soon. That helped global stocks rise strongly last Monday, though the lack of a confirming official announcement and continued worries about the tech sector saw markets ease back over the rest of the week. All up, the S&P 500 closed last week up 1.9%, though it was not enough to save our S&P/ASX 200 Index from shedding 1.1% for the week. Of course, the big news came over the weekend, with China announcing its own range of retaliatory tariff measures, which saw US stocks slump on the first day of this week.
Closer to home, a further drop in iron-ore prices was a notable development, in what was otherwise a very light week in terms of economic data. Weaker commodity prices and narrowing interest-rate differentials with the US have both helped push the $A down further in recent weeks. The $A has been trending down since it peaked on Australia day at US81c.
Globally, the focus is likely to remain on the US-China trade tensions. The great hope is that the two sides could announce they’re preparing to sit down and talk. Markets will also take note of the US payrolls report on Friday and will be especially keen to see another relatively benign average earnings number – after the shock two month ago. The market is expecting a 0.2% gain in average earnings, which would see the annual growth rate inch up to 2.7% from 2.6% – still low enough not to cause concerns.
In Australia, the RBA policy meeting is likely to be another non-event, with rates left on hold. Building approvals and retail trade will be released on Wednesday, which are respectively likely to show housing construction continuing to slowly come off the boil and still relatively patchy consumer spending.