Global stocks continued to shrug off trade war fears as markets in the US, UK and Europe edged higher to end the week.
The S&P500 rose to a five-month high, despite a drag from financial stocks. Shares in JP Morgan took a dive as US earnings season got underway, despite the bank recording record first-half revenue.
The US dollar was steady against most of its major peers on Friday night, after Brexit comments from US President Trump briefly gave rise to a sharp bout of volatility in the UK pound. The AUD closed the week slightly higher at 0.7423 US cents.
And US 10-year bond yields edged lower to 2.829%, leaving the yield spread between 2-year and 10-year US treasuries at 24.7 basis points — the lowest level in 11 years.
To the week ahead:
Australia will get an update on the labour market with June employment data on Thursday (11:30am AEST). The median forecast is for a monthly gain of 16,500 jobs with the unemployment rate holding steady at 5.4%.
While jobs growth in Australia has slowed from last year’s record pace, a recent decline in participation means unemployment is also holding steady.
On Tuesday the RBA releases the minutes from its July meeting (11:30am AEST). Analysts from Westpac said the market may be looking for clarity around what “other factors” have caused a rise in funding costs for Australian banks.
Then there’s the Westpac / Melbourne Institute leading index for June on Wednesday, following the May reading which pointed to a slowdown in growth later this year.
There’s a data deluge from China to start the week on Monday, led by Q2 GDP which is forecast to show annual growth of 6.7%. That’ll be accompanied by June figures for retail sales, industrial production and fixed asset investment.
And the key data release from the US is due on Monday night with June retail sales. “Given the strength of the labour market and high household confidence, spending should remain well-supported, but any disappointment there may have a more pronounced, negative impact on the US dollar,” ANZ’s currency strategists said.
Policy-wise, the key event in the US will be US Fed chair Jerome Powell’s semi-annual testimony to Congress (Tuesday night), which will give an update on the Fed H2 2018 outlook.
And it’s a busy week in the UK, with May jobs data on Tuesday night including the unemployment rate and average weekly earnings. That’s followed by June CPI data on Wednesday, where core inflationary pressures are expected to remain low.
“June retail sales (Thursday night) will be more important to watch,” ANZ said. “Any better-than-expected outcome there would support the Bank of England’s forecasts of a Q2 rebound.”
Here’s the full calendar, via Westpac:
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