NAB Morning Call

Monday 1st June 2020

President Trump has announced that Hong Kong is no longer autonomous and threatened to remove benefits and impose tariffs on the former British colony. But is it all words, with very little action? Meanwhile we’re seeing iron ore prices rise, largely because of concerns over supply from Brazil. With China planning a large infrastructure program to aid their recovery, won’t this be good news for the Australian economy? It’s a question Phil Dobbie puts to NAB’s Tapas Strickland on today’s Morning Call podcast. Plus the optimistic tone set by markets as lockdowns ease and this week, what’s the real jobless number for America?

Friday 29th May 2020

US equities continued to rally today as investors looked for signs that the economy would be getting back on track. But then, just to show how fickle trade is right now, all those gains were lost on the news that President Trump would be making an announcement later on his policy towards China. He’d already managed to knock almost 5 percent off Twitter shares at one stage, threatening action after they slapped a fact-check warning on his tweets. Europe is altogether less complicated, bond yields are down and the Euro is up, on the hope that the 750 billion euro recovery fund will proceed. Phil Dobbie talks to NAB’s Gavin Friend about market action this morning, as well as looking back at Philip Lowe’s statements yesterday and the take-out from Australian Q1 private capex numbers.

Thursday 28th May 2020

The Australian dollar lost ground today as China threatened to ban imports of Australian coal. Phil Dobbie asks NAB’s David de Garis whether it’s in-part because they want to move away from imported coal, or is it a punishment for siding with the US? There’s also discussion about the new stimulus deal for Europe. It has to be debated and agreed by all EU members next week but markets have taken it as a big step forward. And how much optimism is there amongst Australia businesses post COVID-19 – the forward expectations from today’s private capital expenditure numbers will be a strong indicator of that.

Wednesday 27th May 2020

There’s a strong risk-on mood in the markets this morning, with the Aussie and Kiwi dollar showing significant rises against a falling US dollar. Phil Dobbie asks whether news of more easing of lockdowns around the world is offsetting any bad news about tensions between the US and China? They also discuss a UBS report that suggests a second wave of infections is unlikely. Even if it was, a repeat of the mass lockdown the world has seen seems unlikely. All this is helping market sentiment, along with hopes that vaccine research is progressing, with Novavax undertaking human testing in Australia.

Tuesday 26th May 2020

Equities have staged a broad based rebound today and are expected to continue later today as markets reopen in the US and UK. Oil continues to rise too, as demand increases and supplies fall. On today’s Morning Call NAB’s Rodrigo Catril talks to Phil Dobbie about the continuing US-China unrest, weakening the value of the Yuan, with China’s Foreign Minister calling it ‘the new cold war”. There’s renewed optimism in Germany and rising expectations that the ECB will deliver new stimulus next week. And Scott Morrison uses the Press Club today to explain how he will get the Australian economy back to work and out of intensive care.

Monday 25th May 2020

The unrest in Hong Kong with residents ignoring social-distancing to take to the streets to protest against China’s new national security laws. NAB’s Ray Attrill says it’s likely to impact the Australian dollar today and put paid to the strong correlation it’s been having of late with the US share market. It also raises questions about the US response. At home, bond yields responded to the underspend on the JobKeeper allowance, whilst the ECB looks set for further stimulus measures and the Bank of England’s David Ramsden isn’t ruling out negative interest rates, if it’ll help the UK economy.

Friday 22nd May 2020

Market sentiment was tempered somewhat overnight by rising rhetoric between the US and China. NAB’s David de Garis says we can expect more of this as the gap in the President’s polling against Joe Biden has narrowed. China’s decision to impose new legislation on Hong Kong, without going through the legislative council, will add more fuel for Trump’s agenda, creating more market uncertainty. The good news over the last day was largely ignored by the markets – PMIs for the US and Europe were a little better than expected, and the Philadelphia Fed Manufacturing survey showed that many expect the current slump to last less than six months. Here’s hoping.

Thursday 21st May 2020

It’s been another positive session, driving equities higher and giving another boost to the Australian dollar. NAB’s David de Garis says the Aussie’s rise is despite trade tensions with China, instead driven by the prevailing risk-on mood and the rising price of iron-ore. Markets largely ignored yesterday’s Australian retail sales numbers – we knew they were going to be bad – but there will be hope that we’ll see things turnaround a little in the PMI numbers due later for Europe, the UK and the US. UK gilt yields moved into negative territory today as the Bank of England governor admitted that negative interest rates were being ‘actively’ considered. And the FOMC minutes echoed the sombre tone adopted by Jerome Powell yesterday – the bounce back won’t be quick.

Wednesday 20th May 2020

Markets have controlled their excitement after yesterday’s burst of optimism over a potential COVID-129 vaccine. As NAB’s Ray Attrill points out, equities have nonetheless held on to most of the gains. The Aussie and Kiwi dollars saw two of the biggest gains today, despite threats from China to extend the hefty tariffs on Australian imports. Perhaps New Zealand sees this as an opportunity. There’s also discussion about Jerome Powell’s testimony to the Senate Banking Committee, the findings from yesterday’s Australian job numbers and the UK chancellors remarks on their unemployment numbers. And a better than expected ZEW survey reading from Germany.

Tuesday 19th May 2020

There’s been big increases in equity markets and bond yields on the news of a successful stage one vaccine trial in the US. NAB’s Tapas Strickland says the fact that there have been no adverse reactions and could be available for emergency use as soon as the (northern) Autumn. That said, the Fed’s Jerome Powell says it could take till the end of next year for the US economy to recover. China, though, seems to be getting back on track, with oil demand in-line with this time last year, giving a big boost to Brent and WTI crude prices this morning. And ABS payrolls data this morning could show that unemployment has troughed.