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The busiest week of the Australian corporate reporting season looks set for a soft start following a flat finish on Wall Street.
Futures trading suggests the S&P/ASX 200 will open around 58 points or 0.9 per cent weaker after the market’s best week since early July. The index put on 2 per cent over the five days to Friday as earnings season produced more winners than losers.
Today brings full- or half-year reports from retailers JB Hi-Fi and Kogan, industrial heavyweights LendLease, Bluescope and GWA Group, tech leader Altium and Bendigo & Adelaide Bank.
Index heavyweight BHP reports tomorrow, along with Coles and Cochlear. Wednesday brings updates from CSL and Crown Resorts. Thursday is one of the heaviest days of the season, with highlights likely to include Wesfarmers, Qantas, Santos and South32. The week wraps up with reports from Suncorp and Mayne Pharma.
The coming week is light on economic data. The domestic highlight is tomorrow’s release of the minutes from the last Reserve Bank policy meeting. Wall Street has minutes from the recent Federal Reserve policy meeting scheduled for Thursday and manufacturing and services gauges on Friday. US investors await progress on a new coronavirus relief package to replace measures that expired at the end of last month.
Wall Street finished little changed on Friday as the S&P 500 failed for a third straight session to close above its February record high. The broadest of three major US benchmarks finished less than a point or 0.02 per cent in the red at 3,373. The index briefly edged up 0.15 per cent but never traded above the February peak of 3,386. Despite Friday’s setback, the index put on 0.6 per cent during a third weekly advance, finishing within 0.6 per cent of its all-time intraday high.
“New all-time highs are like rusty doors and require several attempts before they finally break open,” Sam Stovall, chief investment strategist at CFRA Research in the US, told Reuters.
The Dow eked out a gain of 34 points or 0.05 per cent. The Nasdaq slid 26 points or 0.2 per cent as recovery plays outperformed Big Tech. The S&P 1500 airlines index put on 0.7 per cent, while Alphabet shed 0.8 per cent and Amazon 0.4 per cent. Cruise lines and retailers also rallied.
Mixed data on the US economy offered little direction. Retail sales increased 1.2 per cent last month, less than the 2 per cent gain anticipated by economists. Industrial production and consumer sentiment both increased more than expected.
“Consumers may be showing a degree of patience here, assuming that Congress will eventually come to an agreement on their differences and forge a deal on stimulus,” Jefferies economists Thomas Simons and Aneta Markowska wrotet. “However, we doubt that most consumers were expecting to see the headlines that were out this week that suggested both sides were still hopelessly deadlocked, and that more negotiations were unlikely to occur before September 8.”
Energy, industrials and financials were the best of the sectors, rising from 0.25 – 0.9 per cent. Several defensive sectors, including utilities and health, declined.
Oil retreated ahead of Wednesday’s meeting of the OPEC cartel and its allies. Brent crude eased 16 cents or 0.4 per cent to US$44.80 a barrel. The cartel is expected to unwind some measures introduced to prop up oil prices during the pandemic.
Gold suffered its first weekly loss in ten weeks as US government bond yields improved. Gold for December delivery settled $20.60 or 1.1 per cent lower on Friday at US$1,949.80 an ounce. The precious metal’s loss for the week was around 3.9 per cent, according to FactSet.
BHP and Rio Tinto recorded modest losses in overseas action even as iron ore extended a winning week. The spot price for iron ore landed in China rose $1 or 0.8 per cent to US$121.75 a dry ton, extending its tally for the week to 2.4 per cent. BHP’s US-listed stock dipped 0.07 per cent and its UK-listed stock 0.49 per cent. Rio Tinto shed 0.34 per cent in the US and 0.99 per cent in the UK.
The dollar started the week in mild retreat, easing 0.06 per cent to 71.67 US cents.
