ASX will slide, RBA should delay planned reduction
“Looking ahead, manufacturing activity will grow solidly in the second half of 2021 thanks to robust domestic and global demand, but growth will slow as the momentum of the recovery leans in favor of hard-hit services and constraints on the US side. offers limit the pace of expansion. “
Ryan Detrick of LPL Financial said US stocks could enter a historically difficult two-month period. “The good news is that stocks are still firmly in a bull market, but the bad news is that the timing is a potential concern now.”
Mr Detrick said seasonal weakness could provide an opportunity to add core positions.
” The&P 500 is up an incredible six months in a row, ”Mr. Detrick also said. “What most might not realize is that this is a very bullish event. In fact, a year later it has grown 18 times out of 21 with an average return of almost 12%. The bull may still have a few tricks up its sleeve.
Agenda of the day
Local: Housing finance in June, construction approvals in June, RBA statement at 2:30 p.m. AEST
Overseas data: euro zone June PPI; US factory orders and durable goods orders in June
ASX futures down 30 points or 0.4% to 7356 around 6:10 am AEST
- AUD + 0.2% at 73.61 US cents
- Bitcoin on bitstamp.net -5.7% at US $ 38,947.14 at 6:20 am AEST
- On Wall Street: Dow -0.3% S&P 500 -0.2% Nasdaq + 0.1%
- In New York: BHP -0.2% Rio + 1.2% Atlassian -0.8%
- Tesla + 3.3% Apple -0.2% Facebook -1.2% Square + 10.2%
- In Europe: Stoxx 50 + 0.7% FTSE + 0.7% CAC + 1% DAX + 0.2%
- Spot gold + 0.1% at US $ 1,816.09 / oz at 2:10 p.m. New York time
- Brent -3.5% to US $ 72.75 per barrel
- US oil -3.8% to US $ 71.14 per barrel
- Iron ore + 1.6% to US $ 184.42 per tonne
- Yield at 2 years: United States 0.17% Australia 0.02%
- 5-year yield: US 0.65% Australia 0.58%
- 10-year yield: US 1.17% Australia 1.17% Germany -0.49%
- US price from 4:15 p.m. in New York
From today’s financial review
Dorsey advocates for the Afterpay mega-deal: The Twitter and Square co-founder told shareholders the massive Afterpay would connect retailers with younger shoppers, with more than a million referrals per day.
Oil Search Investors Trust Gallagher: Man Responsible for ‘Kevin Bounty’ Santos Stock has enjoyed in recent times is key to many Oil Search investors’ backing for $ 21 billion merger dollars.
Transportation companies Uber Technologies and Lyft have pledged on Wall Street that they will be back on track to profitability and growth, thanks to cutting costs, as they release their second quarter results this week. .
News Corp to Acquire U.S. Oil Price Information Service (OPIS) and Related Assets of S&P Global and IHS Markit for US $ 1.15 billion in cash, to double its database on energy, raw materials and renewables.
FootLocker will buy two small shoe store chains for a total of around $ 1.1 billion in cash, the shoe retailer said as it seeks to expand beyond malls and expand its reach in Asia.
The company is buying California-based WSS for $ 750 million and Japanese street clothing retailer Atmos for $ 360 million, it said in separate statements.
Goldman Sachs is raising salaries for its junior employees in the investment banking division, Business Insider reported on Sunday.
Second-year analysts at the bank will now earn US $ 125,000 in base compensation, while first-year associates will earn US $ 150,000, Business Insider reported, citing two people familiar with the situation.
European stocks finished a new high on Monday, as higher transactions and a string of strong financial sector earnings helped markets get off to a good start to August.
The pan-European STOXX 600 index rose 0.6% to close at a record high of 464.45 points, with retail and tech stocks outperforming.
British aeronautical engineer Meggitt climbed 56.7% to the top of the STOXX 600, reaching an all-time high after the US industrial company Parker-Hannifin announced it would buy the British rival in a deal valued at 8.76 billion dollars.
Among other deals, UK asset management services provider Sanne Group jumped 7.6% after announcing it could secure a takeover bid from fund manager Apex Group.
German real estate company Vonovia rose 2.2% as it launched a softened € 19.1 billion offer to buy rival Deutsche Wohnen.
Axa, Europe’s second-largest insurer, gained 4.2% after recording a 180% increase in net income in the first half.
German rival Allianz fell 7.8% after US regulators launched an investigation into Allianz Global Investors structured alpha funds.
Asia-focused lender HSBC edged down 0.3%, even after beating first half pre-tax profit guidance and resuming dividend payments.
Of more than half of the STOXX 600 companies that have released second quarter results so far, 67% have beaten earnings estimates, according to data from Refinitiv IBES.
Chinese A-shares posted their biggest percentage gain since late May on Monday, as investors recovered shares battered by a sell-off last month amid growing concerns about an increase in the number of new coronavirus cases.
Hong Kong stocks also rose, with the Hang Seng index ending up 1.06% after hitting its lowest point since early November last week. Chinese H-shares listed in Hong Kong ended up 1.12%.
The Shanghai Composite Index ended the day up 1.97 percent at 3464.29 points and the blue chip CSI300 index ended up 2.55 percent. This is the largest daily increase since May 25 for both indices.
The gains follow a nearly 5.5% drop for the CSI300 last week, capping its biggest monthly loss since October 2018 after a series of regulatory measures targeting the extracurricular education, technology and education sectors. real estate.
“I think the Chinese A-share market has become an unnecessary victim of recent regulatory events. The so-called “clampdown” actually only affects a few sectors and Chinese ADRs rather than A-shares in general, ”said Qi Wang, managing director of MegaTrust Investment in Hong Kong.
“Seriously, what is the connection between closing high schools and people who drink more or less alcohol, for example? I don’t see any.
BetaShares: “We can expect some staging at the RBA policy meeting on Tuesday. For starters, the Bank will likely postpone the planned reduction in weekly bond purchases from $ 5 billion to $ 4 billion from early September. Less likely, although possible, the RBA might even decide to immediately increase bond purchases to $ 6 billion per week. In terms of the economy, a further gradual adjustment won’t mean much, although it could at least allow the RBA to appear to be doing something in recognition of the brutal impact of the third quarter on growth. economic. “
Morgan Stanley: “We expect the RBA to delay its planned reduction in QE bond purchases from September to at least November, in response to the prolonged lockdowns in New South Wales. “
Scotiabank: “Tuesday’s decision could be marked by the need to reverse earlier cut forecasts. Recall that the RBA had announced at its previous meeting that it would reduce government bond purchases to $ 4B / week against $ 5B / week. The increase in COVID-19 cases and the fact that Sydney will remain locked out until at least the end of August makes compliance with such a plan less likely. “
RBC Capital Markets: “We anticipate three key developments this week: 1) the updated economic forecast from the RBA, with significant downward revisions to GDP likely for the end of 2021 and some fallout until 2022; 2) A probable adjustment of QE3 plans, with the continuation of the current weekly purchase rate of $ 5 billion and the postponement of the reduction schedule; and 3) a further shift in language towards more reliance on data rather than calendar-based advice. “
Chinese ferrous futures fell on Monday, with steel rebar and hot-rolled coils both plunging about 6%, after Beijing updated its position on work to reduce emissions from carbon, raising fears of an adjustment in production cuts.
A Politburo meeting chaired by President Xi Jinping on Friday said China should avoid “campaign-style” carbon reduction efforts.
“The (Politburo’s) requirement could overhaul the task of reducing crude steel production, and possibly have a big impact on steel prices in the near term,” Haitong Futures analysts said in a note. .
Steel rebar and hot-rolled coil posted their highest percentage loss in 10 weeks.
Oil prices fell as weak economic data from China and the United States, the world’s largest oil consumers, and higher crude output from OPEC producers fueled fears of weakness demand for oil and excess supply.
Chinese factory activity growth fell sharply in July, as demand contracted for the first time in more than a year, a survey found on Monday.
The weaker results of the private survey, mainly covering export-oriented manufacturers and small manufacturers, broadly matched those of an official survey released on Saturday.
“China has been leading the economic recovery in Asia and if the pullback deepens, concerns will grow about a significant drop in the global outlook,” said Edward Moya, senior analyst at OANDA.
US manufacturing activity has also shown signs of slowing down. The pace of growth has slowed for the second month in a row as spending reverts to goods services and commodity shortages persist, according to Monday (Tuesday AEST) data from the Institute for Supply Management.
The ISM index of domestic factory activity fell to 59.5 last month, the lowest reading since January, from 60.6 in June.
The volume of Arabica coffee options traded on ICE in July hit record highs as frosts in Brazil caused prices to spike, the exchange said. The monthly total of arabica coffee options totaled a record 664,648 contracts.
Australian equity market
Trading boom pushes ASX to record highs
Square’s $ 39 billion acquisition of Afterpay is propelling market gains, and confirmation of the $ 21 billion merger between Santos and Oil Search is also playing its part.