Macroeconomic/ geopolitical developments
- A regulatory crackdown by Chinese authorities on large internet stocks saw Chinese share indices plunge and also saw some delayed and limited contagion effect on global stock averages.
- We got the Fed decision on Wednesday last week, with a slightly more hawkish tone in the statement, but a slightly more dovish tone from Chairman Powell, stating the economy is still “a ways off” from “substantial further progress”. Overall, this buoyed the broader “risk on” theme across financial markets.
- Amazon earnings were worse than expected, seeing the stock plunge lower, but broader market indices weathered the Amazon storm.
- The ongoing global spread of the COVID-19 Delta variant has left markets somewhat vulnerable to sporadic, “risk off” moves.
Global financial market developments
- Global stock averages were erratic, selling off and rebounding through the week, but stayed broadly firm with the US indices making new record highs.
- Global bond markets pushed towards lower yields, helped by the slightly more dovish tone than expected from Fed Chairman Powell.
- The lowering of yields saw the US Dollar Index sell off.
- EURUSD rebounded, but the underlying tone remains negative.
- GBPUSD surged, easing the prior bear tone
- Gold has rallied with the US Dollar weakening.
- Oil has rebounded after its sell off from an early July extension to a new multi-year high.
- Copper has based and is still trying to bounce.
Key this week
- Geopolitics:
- Monitoring the global spread of the COVID-19 Delta variant.
- Watching for further global lockdown easings.
- Central Bank Watch: We get the Reserve Bank of Australia (RBA) interest rate decision and statement on Tuesday and the Bank of England (BoE) interest rate decision and statement is on Thursday.
- Macroeconomic data: Data standouts this week are the global Markit Manufacturing PMI and US ISM Manufacturing PMI on Monday and Wednesday respectively, then the US Employment report on Friday.
| Date | Key Macroeconomic Events |
| 02/08/21 | China Caixin Manufacturing PMI; German Retail Sales; global Markit Manufacturing PMI; US ISM Manufacturing PMI |
| 03/08/21 | RBA interest rate decisions and statement; New Zealand Employment report |
| 04/08/21 | Australian Retail Sales; China Caixin Services PMI; global Markit Services PMI; US ISM Services PMI |
| 05/08/21 | BoE interest rate decision and statement |
| 06/08/21 | EU Industrial Production; US and Canadian Employment reports |
