Monday Market Minutes: Swings and Roundabouts Aren’t Always Fun

By Glenn Dyer | More Articles by Glenn Dyer

Global sharemarkets shook off Thursday’s blues as bond yields rebounded Friday and that will be repeated in Australia today with the ASX 200 looking at a solid 1% plus gain.

Eurozone shares rose 1.6% on Friday and the US S&P 500 jumped 1.1% to a new high helped by investors “buying the dip” and news of small monetary easing in China after more signs of weakening inflation in June.

The positive global lead saw ASX 200 futures close up 76 points, or 1.1% on Saturday morning, Sydney time, indicating a strong open for the Australian share market today.

The US dollar was easier though, oil and gold rose and the worries about China’s attack on tech stocks was forgotten and the continuing advance of the Delta variant of Covid conveniently pushed to one side.

The surge and surge in Delta Covid infections will return to worry markets this week and upset thinking on growth with the key second quarter GDP figures and trade and retail sales data from China due for release.

America’s June quarter earnings season starts with reports from six major banks expected to show surges in earnings because bad debt provisions are low and set asides from 2020 are again returned to bolster profit and loss accounts (See separate story).

China’s small relaxation of monetary policy late Friday (See separate story) also helped boost western markets, but not iron ore, which fell on Friday to make a small loss for the week.

Wall Street though rallied to new records Friday, with cyclicals and growth back in favour as buyers ignored concerns about the spread of the more infectious Delta variant.

The S&P 500 rose 1.1% to 4,369.55, the Nasdaq Composite gained 1% to 14,701.92 and the Dow Jones Industrial Average advanced 1.3% to 34,870.16. All of the major averages closed near session highs to set new all-time closing highs.

For the four-day, holiday shortened trading week the Dow rose 0.2%, the S&P 500 and Nasdaq each gained 0.4%

The 10-year US Treasury yield rose 7 basis points to 1.36% after testing 1.25% early Thursday.

Goldman Sachs shares jumped 3.6% and JP Morgan Chase 2.9% to lead the Dow ahead of what are expected to be stellar June quarter results this week.

Eurozone shares fell 0.2%, Japanese shares lost 2.9% and Chinese shares fell 0.2%, despite a big hint on Wednesday that a cut in the bank reserve ratios was coming.

The poor global lead along with the worsening coronavirus outbreak in Sydney and the extension and tightening of its lockdown pushed the Australian share market down 0.5% for the week with sharp falls in retailers, health, IT and financial shares.

The Australian dollar ended the week under 75 US cents at 74.88 US cents.


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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