NAB Morning Call

Tuesday 30th June 2020

There’s a little positive sentiment pushing shares higher again today and helping the US dollar gain on the Yen and Swiss Franc. Why the optimism? Because there wasn’t really any new bad news. NAB’s Ray Attrill says the housing market seems to be the brightest spot in the US economic recovery, with a 44 percent increase in pending home sales. The Dallas Fed manufacturing index also gave some encouragement, even with the rising COVID-19 infections in Texas. Today China’s PMI numbers, Aussie weekly jobs numbers, words from Guy Debelle and US consumer confidence numbers from the Conference Board will all be worth watching.

Monday 29th June 2020

Rising infection rates in US southern states hit equities hard on Friday. NAB’s Tapas Strickland says the expectation was that the economy would bounce back as consumer restrictions were eased, but the reimposition of some of those measures has dented confidence. It means COVID-19 data will continue to be watched closely. The results of the Fed’s stress test also hit banking stocks, as share buybacks were prohibited and dividends capped. This week much of the focus will be on jobs numbers, with ABS payrolls data tomorrow and non-farm payrolls for the US at the end of the week. Lawmakers also meet in China to discuss the implementation of the National Security Law, which could see increased tensions with the US over the next few days.

Friday 26th June 2020

Despite growing concerns about the rise in COVID-19 cases in the southern states of the US, equities rose today. NAB’s Gavin Friend explains how the easing of banks’ investment rules contained in the so-called ‘Volcker Rule’ has helped to boost stocks. Otherwise, good news is few and far between. Durable goods orders were higher than expected, but distorted by volatile aircraft orders, and the number of newly unemployed in the US last week is higher than expected. Meanwhile, the distraction of a global pandemic seems to have put Brexit on the back burner, but could there be a determination to reach a conclusion quickly?

Thursday 25th June 2020

Markets have been hit with a triple whammy – disturbing COVID-19 numbers emerging from the United States, a worse than expected downgrade to growth forecasts from the WTO and a big rise in oil inventories, suggesting consumption isn’t picking up as much as hoped. Phil Dobbie talks through all three with NAB’s David de Garis, and the market reaction, which has seen equities take a big hit, the US dollar reverse its downward trajectory and a sharp fall in oil prices. To add to the unease, the US is back to threatening Europe with tariffs, including many new items like biscuits and gin.

Wednesday 24th June 2020

There’s a lot of positive sentiment again today, with US equities on the up and the NASDAQ reaching a new high. Phil Dobbie talks to NAB’s Tapas Strickland about yesterdays PMIs, which have helped perpetuate the hope that a V-shaped recovery is still possible. Yet the lockdown in two regions of Germany serve as a reminder that the virus is not contained, alongside the growth in infections in the United States and Latin America. Still, the UK is easing restrictions further from July 4th, allowing pubs to reopen and Boris to get a haircut. Any concerns over a potential collapse in the US-China Phase One Trade Deal were quickly dismissed with a tweet from the President.

Tuesday 23rd June 2020

In a day that’s been light on news, markets have had a chance to take a more positive outlook, pushing equities higher and the US dollar lower. That’s helped the Aussie dollar and oil – although gold too is rising and close to a seven year high. Phil Dobbie asks NAB’s Rodrigo Catril how influential today’s cornucopia of PMIs (for Australia, Europe, Japan, the UK and US) will be on market sentiment.

Monday 22nd June 2020

Last week was a choppy week as markets tried to balance out positive economic news against rising concerns about COVID-19 infections, particularly in the southern states of the US. As NAB’s Ray Attrill explains, Friday got off to a positive start on rumours that there had been a positive outcome from trade talks between US and China, but then the direction changed when Apple announced it was closing down stores that had re-opened out of the lockdowns, in light of rising infection levels in the US. Retail sales in the UK and Australia provided some positive data but only one can claim a V-shaped recovery.

Friday 19th June 2020

Markets continue to be jittery, with news of reopenings offset by concern about rising infection rates. Then there’s the jobs numbers. Last week 1.5 million more jobless claims were made in the United States, even though the economy has been opening up. “Is it because businesses are finally throwing in the towel as partial reopening reality bites?” asks NAB’s Gavin Friend on today’s Morning Call. It’s not clear yet, but unemployment numbers in Australia give an equal cause for concern. Plus, the curious response to the Bank of England’s decision to purchase another GBP100 billion in government bonds, triggering a fall in the value of the pound and in bond prices. Is the expectation that they need to do more?

Thursday 18th June 2020

Australia’s latest unemployment numbers are out this morning and the rate is expected to rise. But NAB’s David de Garis says we won’t have a real handle on unemployment until the JobKeeper program comes to an end. In today’s Morning Call he points to research from YouGov in the UK, where a significant proportion of employers expect to retrench a chunk of their staff when the furloughing of workers comes to an end. Dave reckons the US job numbers – of which we get the latest weekly read tonight – could be a more significant indicator of the impact on jobs. There’s also discussion on a choppy session for equities and what to expect from the Bank of England today.

Wednesday 17th June 2020

Market sentiment is higher again this morning from a surprise rebound in US retail sales, coupled with talk of a $1 trillion infrastructure program from the Trump administration, and more stimulus from the Fed. News that an existing low cost drug can significantly reduce the COVID-19 death rate has added to the good news. On the downside, the virus is staging a comeback in various places, including Texas, and the UK is facing worse than expected unemployment numbers.