Markets Move Into New Financial Year After Miserable Quarter

By Glenn Dyer | More Articles by Glenn Dyer

Start of the month and the end of the financial year will dominate markets here this week as investors keep a watchful eye on the escalation of coronavirus cases in Victoria and in the US.

Data on trade, retail sales, house prices, and building approvals are all due this week and credit growth figures for May kick off the week on Tuesday – it will again be weak.

The AMP’s chief economist, Shane Oliver says activity in Australia is recovering, but it is not strong.

“Our weekly economic activity trackers for the US and Australia based on high-frequency data for things like restaurant bookings, confidence, retail foot traffic, box office takings, hotel bookings, credit card data, mobility indexes & jobs data are probably a better and more timely guide.

“They are telling us that economic activity is continuing to improve from its April low but they have still only recovered half the initial collapse in Australia and a bit less than that in the US. The Australian tracker is now up for 10 weeks in a row,” he wrote in his weekly economic and markets note

Tomorrow also sees the ABS’ payroll and wages survey for mid-June which is likely to show improvement as more business re-open – the number of hours worked will be watch very closely.

CoreLogic home price data for June is likely to show a further 0.7% decline in home prices and building approvals for May are likely to fall 8% (both due Wednesday), along with the survey of Australian manufacturing for June.

The trade surplus for May (Thursday) is likely to have remained large and final retail sales data also for May will be out Friday and will confirm the strong rise of more than 16% detailed in the preliminary survey from the Bureau last week.

The ASX will be dominated by end of month, quarter, financial year window dressing, and profit-taking. Perhaps they will even each other out. The window dressing will include end of financial year tax selling. With two days to go the ASX 200 is down 10.8% for the year and 11.6% year to date. But it is up 21.9% in the quarter so far and 2.6% for the month of June.

Today and tomorrow though will see prices of a wide range real estate trust, property group, infrastructure funds and similar listed groups go ex-distribution. Security prices will adjust today and tomorrow.

Wednesday, July 1 sees the various surveys of manufacturing here (with the Commonwealth Bank) and especially in China. The first official survey is out on Tuesday. Services surveys are out Friday.

US jobs data is out on Thursday night, our time, and will be the major data drop globally. markets, starting with Australia will have the opportunity to react within 12 hours of the release of the data this week instead of the normal three days.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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