22 October 2020
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Good morning, Australia

Craig James
27 July 2020

How’dy USA

In US economic data, the IHS Markit 'flash' manufacturing purchasing managers' index (PMI) lifted to 51.3 in July from 49.8 in June (survey: 52). The services PMI rose to 49.6 in July from 47.9 in June (survey: 51). New home sales rose by 13.8% in June (survey: 3.6%) to an annualised rate of 776,000 units - a near 13-year high.

US share markets closed lower on Friday amid rising geo-political uncertainty. Beijing fired back at Washington's shuttering of China's Houston consulate by closing the US consulate in the city of Chengdu. Intel shares plunged by 16.2% after warning of a production delay. American Express shares fell by 1.4% after reporting an 85% slump in quarterly profit. Tesla shares lost 6.3%. But Verizon Communications shares gained 1.8% after topping sales estimates. The Dow Jones index slid by 182 points or 0.7%. The S&P500 index eased by 0.6%. And the Nasdaq index lost 98 points or 0.9%. Over the week the Dow Jones fell 0.7%, the S&P 500 dipped 0.2% and the Nasdaq lost 1.3%.

US treasury bond prices were little changed on Friday. US 2-year yields were steady near 0.15% and US 10-year yields rose by 1 point to near 0.59%. Over the week 2-year yields were flat and 10-year yields fell by 4 points.

Bonjour Europe

European share markets fell sharply on Friday as escalating US China tensions and virus concerns weighed on investor sentiment. The pan-European STOXX 600 index closed 1.7% lower and the German Dax index fell 2%, despite euro zone data showing business activity in the bloc had returned to growth in July. The UK FTSE index was down 1.4% with London-listed shares in Rio Tinto also 1.4% lower and shares in BHP fell 1.8%.

Hello World!

Major currencies were firmer against the US dollar in European and US trade. The Euro rose from lows near US$1.1580 to highs near US$1.1656 and was near US$1.1654 at the US close. The Aussie dollar rose from lows near US70.64 cents to highs near US71.06 cents and was near US71.03 cents at the US close. The Japanese yen lifted from levels near 106.42 yen per US dollar to JPY105.68 and was near JPY106.12 at the US close.

Global oil prices rose on Friday on US supply concerns with Tropical Storm Hanna forecast to cross Corpus Christi, Texas on Saturday. The Brent crude price rose by US3 cents or 0.1% to US$43.34 a barrel. And the US Nymex price gained US22 cents or 0.5% to US$41.29 a barrel. Over the week Brent rose by US20 cents or 0.5% and the Nymex lifted by US70 cents or 1.7%.

Base metal prices fell on Friday as US-China tensions weighed on risk sentiment. Copper fell (-2.1%) most with aluminium (-0.1%) down least. Over the week metals rose by up to 3.3% with nickel up the most. But copper fell by 0.4% - its first loss since mid-May.

The gold futures price rose by US$7.50 or 0.4% to near 9-year highs of US$1,897.50 an ounce. Spot gold was trading near US$1,901 an ounce at the US close. Over the week gold rose by US$87.50 an ounce or 4.8%. Iron ore fell by US$1.65 or 1.5% to US$109.55 a tonne. Over the week iron ore fell by US90 cents a tonne or 0.8% - the first loss in three weeks.

G’day Australia

In Australia, the CommSec State of the States report is issued. RBA Assistant Governor Christopher Kent speaks. China industrial profits are due. US durable goods orders data and the Dallas Fed manufacturing index are released.

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