US stocks edged lower on Friday night in a cautious session, as markets tracked the outcome of US-China trade talks in Washington.
With more of a risk-off tone prevailing, the yield on US 10-year treasuries fell by seven basis points to 3.06%.
The US dollar index climbed for the fifth straight day and closed at a new 2018 high. The pound and euro fell further against the greenback while the Aussie dollar traded flat for the session.
Italian markets remained in focus following the establishment of a populist governing coalition.
Stocks in Milan fell by 1.48% — outpacing declines in the broader Eurozone of 0.28% — while the yield on Italian 10-year bonds rose to a seven-month high.
Looking ahead, it’s a quieter schedule of key data and events this week, both locally and abroad.
In Australia, the royal commission opens another round of hearings, this time with a focus on business lending, and the banks can expect their reputations to be on the line again as the inquiry looks at instances of lax lending practices or tough demands from institutions to small companies.
Wednesday’s release of construction data for the March quarter will provide an update on the value of construction work done in 2018. It follows a sharp decline in construction activity in the December quarter.
The Westpac-Melbourne Institute leading index is also due out on Wednesday.
Then at 6pm AEST that evening, RBA Governor Philip Lowe will give a speech in Sydney on the outlook for China at the Australia-China Relations Institute.
The market will be following developments in the Hayne royal commission closely, with business lending by major financial institutions the subject of public hearings this week.
UK inflation data will get some attention on Wednesday night. But ANZ’s currency strategists say the following night’s retail sales figures will be more important for the pound, as any further rate hikes by the Bank of England will be reliant on a pickup in spending.
Also on Wednesday there’s preliminary manufacturing PMIs across Japan, Europe and the US for May, which will provide a useful update on the outlook for global growth.
Elsewhere it’s mainly second-tier data on the schedule. The US Fed’s minutes from its May meeting are out on Wednesday night and there’s the usual round of Fed speakers.
Here’s this week’s calendar, via Westpac:
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