US equities halted a winning streak on Friday ahead of a public holiday on Monday.
United States
The S&P 500 closed -0.37% lower on Friday amid an estimated $4.2 trillion in option contracts expiring known as “OpEx”. The Dow weakened -0.32%, the Nasdaq fell -0.68% and the Russell 2000 Index declined by -0.73% while the VIX declined -6.62% to 13.54. The yield on the 2-Year US Treasury bond was up 6 basis points to 4.71%. The yields on the 10-Year Treasury bond rose by 4 basis points to 3.76%, while the yield on the 30-Year bond rose by 1 basis points to 3.85%.
Data on Friday in the form of the Michigan Consumer Index, which reflects consumer sentiments on the economy, improved from 59.2 in May to 63.9 in June, beating forecasts as a drop in inflation expectations and the resolution of the US debt ceiling boosted sentiment. In a welcome development, short-term inflation expectations for the year ahead fell to a two year low with consumers expecting prices to rise 3.3% down from 4.2% in May. Over the course of the week, investors will be focused on Fed Chair Jerome Powell’s testimony before Congress on Wednesday and Thursday. Also of note this week is the Conference Board’s leading index for May on Thursday along with PMI reports for June. Wall Street will be closed on Monday on account of Juneteenth holiday.
Europe
The European markets closed higher at the end of trading on Friday. The STOXX 600 Index gained 0.47%, with nine out of the eleven sectors closing in the green. Consumer discretionary led the gains by rising 1.22%, utilities followed by adding 1.12% while healthcare jumped 0.89%. Technology was the biggest laggard, declining -0.39%. The CAC climbed 1.34%, the DAX firmed 0.41% while the FTSE edged up 0.19%.
Ahead for the week, investors will be focused on UK inflation data for May as well as a Bank of England rate decision. Tuesday will see the release of inflation data, expected to show core prices were unchanged at 6.8% over the year with headline prices expected to ease modestly to 8.5% from 8.7% The data comes ahead of Wednesday’s BoE rate decision where economists are widely forecasting a 0.25% rate increase. Thursday will also see the release of Eurozone consumer confidence for June along with UK retail sales and PMI reports for the region.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Australia
The ASX 200 is expected to open flat this morning, with ASX futures down -0.04% to 7226. A potential catalyst for Asian equities today will be headlines following a 7.5 hour discussion between US Secretary of State Antony Blinken and Chinese counterparts in Beijing with the aim to reestablish senior-level communications with more meetings set for Monday. The Index rose by 1.06% on Friday to 7,251 following broad gains on Wall Street on Thursday. The energy sector was the star performer jumping 3.52% following higher oil prices, technology climbed 1.50% and consumer discretionary added 1.22%. Healthcare was the only sector to close lower, receding -0.09%. Stocks in energy benefited from the rising oil prices, Whitehaven Coal rocketed 8.27%, Paladin jumped 4.23%, Santos climbed 4.11% and Woodside Energy gained 3.46%. In technology, Xero gained 2.57%, Megaport rose 1.77%, and Wisetech added 1.19%.
Economic data is fairly light this week, with the release of the latest RBA policy minutes on Tuesday, followed by the Westpac leading index for May on Wednesday. Friday will round off the week with PMI reports for June.
Commodities
In commodities, oil jumped linked to optimism of a rise in demand from China. The price of WTI and Brent Crude rose by 1.64% and 1.24% to $71.78 and $76.61 respectively. In precious metals, the price of spot gold remained unchanged at $1,957, while the price of spot silver rose by 1.42% to $24.2. In industrial metals, copper fell by -0.31% to $389, nickel advanced 0.23% to $22,956, and SGX Iron Ore gained 0.12% and is a further 0.43% higher this morning at US$114.
Economic Calendar
19th June 2023
NZ Services NZ PSI (May) 08:30
USA NAHB Housing Market Index (Jun) 00:00
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
