US stock markets snapped a four-week winning streak as the S&P500 rejected resistance coming from the critical 200-day moving average at 4320 and as central bankers remained hawkish. St Louis president James Bullard, who we believe is still the man to watch, is calling for another 75bp rate hike at next month’s meeting.
The ASX200 shrugged off the weaker lead from Wall Street to lock in a fifth consecutive week of gains, helped higher by a bumper earnings report from BHP, and strength in consumer, materials, and energy stocks.
Here are the top five things to watch in markets this week:
1. Australian June half reporting season stays in focus
After some early earnings bombshells, including Beach Energy, Bendigo Bank, Xero and TPG, earnings season picks up the speed this week. Reports are due to drop from 100 companies, including Coles, Flight Centre, Nine, Woolworths, and Wesfarmers.
Qantas is also set to report its full year results (Thursday) after a turbulent year that included pandemic shutdowns to the shambolic travel reopening as a wave of pent-up demand unleashed chaos and national outcry. You can read our full preview of what to expect from the Qantas earnings report here.
2. All roads lead to Jackson Hole
This week the Federal Reserve Bank of Kansas hosts the Jackson Hole Economic Symposium titled ‘Reassessing Constraints on the Economy and Policy’. The discussion will focus on supply-side constraints and how monetary policy should be set to address them. The nature of the topic lends itself to another round of hawkish central bank speak.
3. More evidence to suggest US inflation has peaked
The release of the Fed’s preferred measure of inflation, the core PCE Price Index this week, may provide more evidence that inflation has peaked. The market is looking for a 0.3 per cent gain in July which would see the annual rate fall modestly to 4.7 per cent from 4.8 per cent in June.
4. US earnings season winds up with a ZOOM
Q2 US earnings season is winding up. However, some notable companies are still left to report, including Peleton, ZOOM and chipmaker Nvidia.
The share price of ZOOM has fallen over 80 per cent from its pandemic high of October 2020 of $565 to near $100 per share. Will its earnings report be the catalyst for a renewed Zoom in its share price?
5. EURUSD set to break below parity … again
Last week the EURUSD closed below 1.0100 for the first time in five weeks following mostly hawkish Fed Speak and an ugly backdrop that includes an energy crisis, the war in Russia and slowing growth and high inflation. This leaves the EURUSD vulnerable to a move below parity with the US dollar and a fresh 20-year low.
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