ASX200: Australian Trade in Focus as the Markets Look to Shake Off COVID-19 Woes

The ASX200

It was a choppy day for the ASX200 on Wednesday. Reversing a 0.22% gain from Tuesday, the ASX200 fell by 0.28% to end the day at 7,236.

While better than expected, 3^rd quarter GDP numbers from Australia highlighted the economic woes that could result from another COVID-19 breakout.

Disappointing economic data from China and hawkish chatter from FED Chair Powell overnight added downward pressure on the day.

The Stats

Manufacturing sector and 3^rd quarter GDP numbers were in focus this morning.

In November, the AIG Manufacturing Index increased from 50.4 to 54.8.

According to the November Survey,

• This was the first month of improvement following 3 months of flat results.
• All sectors expanded except for chemicals, which was stable.
• Food & beverages bounced back into growth, with the PMI up 19.9 points to 57.3.
• All 7 activity indices expanded or were stable in November. Deliveries rose by 12.2 points to 53.4, with stocks up 7.0 points to 58.6. Strong demand supported an 8.5 point rise to 54.6 for exports.
• The input price index slipped by 3.5 points to 78.3, while the selling index hit a series high 68.1, up by 4.2 points in the month to 68.1.

The Aussie Dollar moved from $0.71242 to $0.71299 upon release of the figures that preceded 3^rd quarter GDP numbers.

In the 3^rd quarter, the economy contracted by 1.9% quarter-on-quarter versus a forecasted 2.7% contraction. Year-on-year, the economy grew by 3.9% versus a forecasted 3.0%. The economy had expanded by 9.6% in the 2^nd quarter year-on-year, and by 0.7% quarter-on-quarter.

According to the ABS,

• Domestic demand drove the demand with prolonged lockdowns leading to a marked decline in household spending.
  • Private demand detracted 2.4 percentage points from GDP, with a 4.8% fall in household final consumption expenditure.
  • Spending on services slid by 5.8%, with falls in hotels, cafes, and restaurants, recreation and culture and transport services.
• The decline was partly offset, however, by growth in net trade and public sector expenditure.
  • Public demand contributed 0.7 percentage points to GDP growth.
• Household savings to income rose from 11.8% to 19.8%, the rise driven by increased household income coupled with reduced spending.

From China

In November, the Caixin Manufacturing PMI fell from 50.6 to 49.9 versus a forecasted decline to 50.5.

According to the November survey,

• Three of the 5 PMI components weighed in November, these being
  • New orders fell marginally after 2-months of expansion. High output prices and the pandemic were cited as reasons for the decline.
  • Employment levels fell for a 4^th consecutive month, though the rate of job shedding remained marginal.
  • Suppliers’ delivery times also weighed.
• By contrast, output and stocks of purchases had positive influences.
• After rising rapidly in October, input costs rose only modestly in November, with the rate of inflation the slowest since Oct-2020.
• As a result, the rate of output charge inflation also slowed considerably in the month.

The Market Movers

It was a mixed day for the banks. Macquarie Group fell by 0.59%, with ANZ ending the day with a 0.15% loss. It was a relatively bullish day fo the rest, however. CBA rose by 0.68%, with, Westpac and NAB seeing gains of 0.34% and 0.33% respectively.

Commodity stocks were on the move, however. Rio Tinto led the way, rallying by 2.49%, with Fortescue Metals Group Ltd and BHP Group seeing gains of 1.29% and 1.45% respectively. Newcrest Mining bucked the trend however, falling by 0.34%.

Other Asian Markets

Elsewhere, it was a bullish session. The Nikkei and the CSI300 Seng Index rose by 0.41% and by 0.24% respectively, with the Hang Seng gaining by 0.78%.

The Day Ahead

It’s a quieter day ahead on the Aussie economic calendar. From Australia, key stats include trade data for October. With little else for the markets to consider, commodities and U.S futures will also provide direction.

Ahead of the open reaction to FED Chair Powell’s 2^nd day of testimony would also need to be required.

Away from the economic calendar, the markets will need to continue monitoring COVID-19 news updates from across the globe.

For a look at all of today’s economic events, check out our economic calendar.