22 October 2020
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Good morning, Australia

Craig James
1 June 2020

How’dy USA

US President Donald Trump said his administration will begin to eliminate special treatment for Hong Kong in response to China's plans to impose new security legislation in the territory.

In US economic data, personal income rose by 10.5% in April (forecast -6.5%) but spending fell by 13.6% (forecast -12.6%). The key inflation measure fell 0.4% to be up 1% on the year. Consumer sentiment rose from 71.8 in April to 72.3 in May.

US share markets ended mixed with relief that the US didn't threaten the China trade deal over Hong Kong. The Dow Jones index fell 17.5 points or 0.1% but the S&P500 index rose 0.5% and the Nasdaq lifted 121 points or 1.3%. Over the week the Dow rose 3.8%; S&P 500 rose 3%; Nasdaq rose 1.8%. Over May the Dow rose 4.3%; S&P 500 rose 4.5%; Nasdaq rose 6.8%.

US treasury bond prices were firmer (yields lower). US 2-year yields fell by 2 points to near 0.16% and US 10-year yields fell by 6 points to near 0.65%. Over the week both US 2-year and 10-year yields were down around 1 point.

Bonjour Europe

European share markets fell ahead of the US President's response on China's national security law for Hong Kong. The panEuropean STOXX 600 index fell by 1.4%; the German Dax index lost 1.7%; the UK FTSE index fell 2.3%. In London trade shares in Rio Tinto rose 0.6%; shares in BHP fell 0.5%.

Hello World!

In China, the manufacturing purchasing managers index fell from 50.8 to 50.6 in May with services up from 53.2 to 53.6.

Major currencies were mixed against the US dollar in European and US trade. The Euro fell from near US$1.1143 to US$1.1080 and was near US$1.1100 at the US close. The Aussie dollar held between US66.15 cents to US66.85 cents and was near US66.65 cents at the US close. And the Japanese yen fell from JPY107.07 per US dollar to JPY107.89 to be near JPY107.77 at the US close.

Global oil prices soared as much as 5.3% on Friday on optimism that the US-China trade deal would remain intact. The US oil rig count also hit an 80-year low. The Brent crude price rose by US4 cents to US$35.33 a barrel but the more active August contract rose $1.81 or 5% to US$37.84. The US Nymex price gained US$1.78 or 5.3% to US$35.49 a barrel. Over the week August Brent rose 6.1% and Nymex rose by 6.7%. Over May Nymex posted a record 88.4% increase.

Base metal prices rose 0.8-2.7% on the London Metal Exchange on Friday. Zinc rose the most; aluminium was up the least. Against the trend tin fell 0.9%. Over the week metals rose 0.2-3.0%: aluminium up the most and zinc up the least.

The August gold futures price rose US$23.40 or 1.4% to US$1,751.70 an ounce. Spot gold was near US$1,726 an ounce in late US trade. Over the week August gold fell US$1.80 or 0.1%. Iron ore rose by $4.50 or 4.7% on Friday to US$100.90 a tonne. Over the week iron ore rose US$4.05 or 4.2%.

G’day Australia

In Australia, data on home prices is released with purchasing manager index (PMI) results. Manufacturing PMIs are released in China (Caixin) and the US. Construction spending is released in the US.

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