Trader’s Diary: Everything you need to get ready for the week ahead
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The recent focus on central banks’ dot-plotting interest rate rises took a back seat to old school geopolitics this week, as mid-week reports of shelling between the Ukrainian army and Russian-backed separatists injected another booster of uncertainty into global markets.
Equities got the most jitters, the tech-heavy Nasdaq stripped of 3% as traders looked to shed riskier assets.
First up though, there’s been a lot of inflammatory jawboning about inflation, most especially in the States. Here’s a very handy, up-to-date forecast for inflation rates:
Still, the first key event for the week was the release of the RBA February meeting minutes.
After digesting a speech and parliamentary testimony by Governor Dr P. Lowe, as well as the February (SOMP) Statement on Monetary Policy, Westpac chief economist Bill Evans says it all still points to a “patient” approach to policy, with two more CPI prints likely to be assessed before an interest rate decision is made.
“We remain comfortable with our current profile of a peak rate of 1.75% and a cycle lasting into 2024 but the legacy of the pandemic’s emergency measures certainly creates a much greater degree of uncertainty than we have seen in earlier cycles,” Evans said.
In the meantime, safe havens came back strongly. Gold prices waltzed to eight-month highs as demand against geopolitical mis-steps and the pullback in real Treasury yields led other investors to take shelter in bonds.
It’s hard not to admire this admirably chilling assessment from BCA Research:
“The Ukraine crisis is escalating as predicted. We maintain our odds: 65% limited incursion, 10% full-scale invasion, 25% diplomatic de-escalation.”
BCA says the key to sorting all this is, “a Western renunciation of defense cooperation with Ukraine after a verified Russian troop withdrawal.”
But, until then:
“Stay long gold, defensives over cyclicals, and large caps over small caps. Stay long cyber security stocks and aerospace/defense stocks relative to the broad market.”
And just quickly, prices at the pump haven’t been great, you’d have noticed. They certainly haven’t been impacted by the latest reports suggesting a new, Trump-free Iran agreement has already been drafted and includes a staged approach to lifting sanctions which would see Iranian oil supply hitting tight global markets.
XM’s Peter McGuire reckons oil prices are headed for “a substantial weekly loss” at the prospect.
“Admittedly, it’s quite encouraging oil prices haven’t gone into freefall on the news. This has been a huge risk for several months, and the fact it (returning Iranian supply) hasn’t hit oil prices even harder speaks to how thirsty the market is for energy,” he said on Saturday morning because weekends are for the weak.
RBA Assistant Governor Kent addresses Australian Financial Markets Association, midday.
NZ Jan credit card spending
Australia Q4 wage price index
Australia Q4 construction work
NZ RBNZ policy decision
Australia Q4 private new capital expenditure
Australia 2021/22 capex plans
NZ Jan trade balance
NZ Feb ANZ consumer confidence
NZ Q4 real retail sales
US public holiday
Dec FHFA house prices
Dec S&P/CS home price index
Feb Markit manufacturing PMI
Feb Markit service PMI
Feb consumer confidence index
US inflation for December. The current annual core CPI rate is at 4.9%
US Jan Chicago Fed activity index
Initial jobless claims
Q4 GDP, annualised
Jan new home sales
Feb Kansas City Fed index
US Jan personal income
Jan personal spending
Jan PCE deflator
Jan core PCE deflator
Jan durable goods orders
Jan pending home sales
Feb Uni. of Michigan sentiment
Feb Nikkei Japan PMI Services
Feb Nikkei Japan manufacturing PMI
Eur Feb Markit manufacturing PMI
Feb Markit services PMI
UK Feb Rightmove house prices
Feb Markit services PMI
Feb Markit manufacturing
Germany Feb IFO business climate survey
European Feb consumer confidence
UK Feb GfK consumer sentiment
(sources: Commsec, Investing.com, Refinitiv, ANZ, Westpac)
Listings are subject to change. A lot.
Listing: 24 February
IPO: $6m at $0.20
The seafood processor, wholesaler, retailer and exporter has plans to expand its distribution network, aiming to roll out its Seafood Management Solution to supermarkets. Company will also use funds to upgrade processing equipment.
Listing: 21 February
IPO: $5.5m at $0.20
The explorer will be focused on two projects, including the Ord Basin project along the WA/NT border, which represents “a district scale, greenfields exploration opportunity for copper, nickel and PGE deposit types.”