Australian Market Preview 29 June

A snapshot of overnight moves and a look to the upcoming Australasian session.

Equities markets succumb to second wave fears.

Market Moves



Hopes of a quick reopening to the world's largest economy, and support for the v-shaped recovery thesis, continue to be dashed by rising cases of Coronavirus in a number of key US states. A number of localities have halted reopening plans as the occurrence of the illness has spiked in risk taking younger Americans.

Shares on the local ASX are expected to open as much as 2.5% lower based upon the ASX 200 Share Price Index (SPI) futures which closed the Friday session at 5757, a 147 point discount to the physical market.

The materials sector may be one small source of outperformance as prices for a number of key industrial metals rose on the London Metals Exchange. Gold stocks may also improve on their recent strong outperformance as the price of spot gold rose to sit at US$1774 per ounce.


Macro Economy



Personal incomes fell by 4.2% as the impact of reduced working hours resulting from shutdowns took their toll, and after one-time government crisis payments popped incomes a record 10.8% in April. The fall was better than expected however.

Personal spending increased by 8.2%, up from April's 12.6% drop. May's result is the highest rate of increase on record. Note though that much of the spending came from states like California, Texas, and Florida that have been hardest hit by the possible second wave of infections.

Inflation remained weak as the Fed's preferred measure of inflation, the personal consumption expenditures (PCE) price index excluding the volatile food and energy components, edged up 0.1% in May.