Trader’s Diary: Everything you need to get ready for the week ahead
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US consumer sentiment has dropped to its record low as worries about inflation continue to grip the country.
The index fell to an all-time low of 50 in June, as the worst inflation in 40 years takes its toll on the US economy.
The US stock market is officially in bear territory even as the Fed is plotting a series of rate increases throughout the rest of the year.
Last week, Fed Chairman Jerome Powell told Congress that a recession is a ‘possibility’.
“It’s certainly a possibility,” Powell said during the first of two days of Congressional hearings.
“We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential to bring down inflation, which is running at a 40-year high.”
Powell also testified that achieving the Fed’s goal of an economic soft landing will be “very challenging.”
The world’s richest man Elon Musk chimed in to the recession debate, telling Bloomberg that he sees a greater chance of 50-50 for a US recession, adding that he will lay off 10% of Tesla’s salaried stuff.
Back home, RBA governor Dr Philip Lowe told a forum in Sydney last week that inflation will hit 7% by the end of this year, but doesn’t think that a recession will eventuate in Australia.
He did however warn that more rate rises were coming.
“As we chart our way back to 2 to 3% inflation, Australians should be prepared for more interest rate increases,” Lowe said.
“We are now expecting inflation to peak around 7 per cent in the December quarter. Following this, by early next year, we expect that inflation will begin to decline.”
“How fast we increase interest rates, and how far we need to go, will be guided by the incoming data and the board’s assessment of the outlook for inflation and the labour market,” Lowe added.
Some experts are not convinced that a recession will eventuate, pointing to the spreads in the bond market.
“The spreads between the two-year and the 10-year yield are still positive, even though they flattened a lot,” Kristina Hooper, chief global strategist at Invesco, told Bloomberg.
“There’s a very big positive spread between three-month and 10-year yields, which some might argue is an even better indicator of whether or not we go into recession,” she said.
An inversion of the yield curve, or where the shorter dated yield trades above the longer dated ones, is often used a leading indicator of an economic downturn.
Last week, the US stock market had one of its best weeks in a month with the S&P 500 rising by almost 7% and the Nasdaq by 8.5%.
This week could even see market sentiment returning as China declares ‘victory’ on Covid-19 in Shanghai.
On Saturday, Shanghai’s top party chief said the city has reported zero new Covid cases, the first time since February.
Weekly consumer confidence index
Preliminary retail trade for May
Job vacancies for May
Engineering construction activity for the March quarter
Private sector credit for May
CoreLogic home prices for June
Manufacturing purchasing managers’ indexes for June
US Pending home sales for May
US home prices for April
US Economic growth, GDP for the March quarter
China purchasing managers’ indexes for June
US personal income and spending for May
US construction spending for May
According to the ASX, these stocks will list this week:
Listing: 28 June
IPO: $4.8m at $0.20
This explorer is planning to acquire the Biloela project in Queensland which is prospective for gold and copper.
The company plans to compile data and geophysical surveys at the Flanagans and Great Blackall prospects, followed by a drilling program at both prospects.
Listing: 30 June
IPO: $8m at $0.20
This copper explorer has tenements in the prospective North West minerals province of QLD – adjacent to the world-class Mt Isa mines.
The company is embarking on an aggressive drill program with target testing underway.
Listing: 30 June
IPO: $8.5m at $0.20
This explorer has its eyes on the Sarytogan Graphite Project in Central Kazakhstan which is un-substitutable in the battery market, with drilling kicking off late last month.
Kazakhstan is an established mining jurisdiction smack bang between the largest battery manufacturers in Europe and China.
Plus, the project already has a mineral resource of 209 Mt at 28.5% total graphitic carbon (TGC) for 60 Mt contained graphite.
The company says the ASX has stated it is not currently in a position to provide a formal listing decision, and has requested that the title extension beyond October 2022 be procured ahead of listing.
SGA is working on fast-tracking the title extension – targeting June 2022.