ASX to slip after Wall Street fades; Oil prices drop

Summary

  • ASX futures were down 0.2% and hinting at a weak start for the local benchmark on Monday. The ASX 200 closed flat on Friday at 6715.4 
  • Wall Street sagged into the weekend as investors mulled over the details of Joe Biden’s $US1.9 trillion stimulus package. The Dow Jones fell 0.6%, the S&P 500 lost o.7%, and the Nasdaq dropped 0.9% 
  • Chinese Q4 GDP data is due today. Economists are tipping a rise of 6.2% on a year-through basis, accelerating from 4.9% growth at the end of Q3
  • Brent crude fell 2.3% on Friday to $US55.10 a barrel and US oil fell 2.3% to $US52.36 a barrel. Iron ore edged up 0.8% to $US173.69 a tonne

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Inauguration day, US earnings and central banks set to dominate week ahead

By Kyle Rodda

It promises to be a big week in global markets, with US politics remaining firmly in focus and plenty of data for market participants to peruse.

Stocks in Europe and the US plunged to finish last week and SPI Futures are pointing to a 0.24 per cent drop for the ASX/200 when trade begins on Monday.

Here are some events to watch in the week ahead:

Members of the National Guard walk past a security perimeter outside the US Capitol as preparations are made ahead of the presidential inauguration in Washington.
Members of the National Guard walk past a security perimeter outside the US Capitol as preparations are made ahead of the presidential inauguration in Washington.Credit:Bloomberg

Inauguration Day

US President-elect Joe Biden will be sworn in as America’s 46th President on Thursday morning (AEDT). Investors will be wary of any potential for armed protests in the lead-up to the event, especially as impeachment proceedings against US President Donald Trump continue. However, the primary concern in the markets will likely remain Biden’s expansive fiscal stimulus agenda. Biden announced a larger than expected $US1.9 Trillion worth of spending last week that will see higher direct payments to individuals, more money to combat the pandemic, and beefed-up support for state governments.

US earnings season

US earnings season has kicked-off on a positive note. Only 26 companies across the S&P500 have reported so far. But according to data compiled by Bloomberg intelligence, 96 per cent have exceeded analysts forecasts. Financial sector stocks dominated the headlines last week, with Wells Fargo, Citigroup and JP Morgan delivering a mixed set of results. However, despite that, investors welcomed moves from all 3 institutions to reduce the provisions set aside for bad loans. In the week ahead, US big banks will remain in the limelight, while Netflix will also hand down results.

Australian jobs and Chinese data

Jobs data will highlight the local calendar in the week ahead. Economists are forecasting another month of solid jobs growth for the Australian economy, with consensus estimates suggesting a gain of 50,000 jobs, which ought to push the unemployment rate down to 6.7 per cent. More broadly, China’s monthly economic data dump will also garner attention this week, and will include the country’s latest GDP figures. Economists are tipping that the Chinese economy expanded 6.2 per cent on a quarter-over-year basis, as the Middle Kingdom’s recovery continues to outpace the rest of the world’s.

Central bank meetings

The first lot of central bank meetings will kick-off for 2021 this week, with the Bank of Japan, Bank of Canada and European Central Bank all announcing policy settings. None of the 3 are expected to move rates or adjust broader policy, with interest instead in what each has to say about the economic outlook and policy guidance for the new year. Downside risks remain a concern for the markets, as lockdowns in Europe and a resurgence of the virus in Japan stoking concerns. But with the global economy awash with stimulus, investors will be curious to get monetary authorities’ views on another looming risk: the possibility that policy may need to be tightened sooner than expected owing to a faster than expected pick-up in growth and inflation.

Listen to the Short Squeeze, our weekly markets podcast produced in conjunction with IG here. Episodes last about 10 minutes and are also available through Spotify and Google Podcasts.

This column was produced in commercial partnership between The Sydney Morning Herald, The Age and IG. Information is of a general nature only.

Good morning

Good morning all, and welcome to a new week with Markets Live.

The dream team is back together. Lucy Battersby has returned from her sabbatical and will be joining Alex Druce to bring you the news today.

A soft start is likely for the ASX 200 after Wall Street sagged into the weekend. Oil and gold slipped, while iron ore edged higher.

This blog is not intended as financial advice

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