ASX200: Weekly Wrap – 10/12/2021

The news in the week coincided with the RBA’s view that the new strain would not derail the economic recovery. On Tuesday, the RBA left policy unchanged, which was in line with expectations.

Throughout the week, however, market sentiment towards U.S inflation and FED monetary policy pegged the ASX200 back.

The Stats

Economic data was limited to house price figures. In the 3^rd quarter, the House Price Index rose by 5.0% quarter-on-quarter. The index had risen by 6.7% in the previous quarter.

From Elsewhere

Trade and inflation figures for China were in focus.

China’s USD trade surplus narrowed from $84.54bn to $71.72bn in November. Exports rose by 22%, year-on-year, while imports were up 31.7%. Imports had been up by 20.6% in October, while exports had been up by 27.1%.

While exports were down, strong demand driving imports was a positive for the markets.

In November, China’s annual rate of inflation accelerated from 1.5% to 2.3%. Economists had forecast an annual rate of inflation of 2.5%. Month-on-month, consumer prices increased by 0.4% versus a forecasted 0.3% rise. In October, consumer prices had risen by 0.7%.

Significantly, however, was softer wholesale inflation. In November, the annual wholesale rate of inflation eased from 13.5% to 12.9. Economists had forecast an annual wholesale rate of inflation of 12.4%.

The Market Movers

It was a bullish week for the banks. NAB led the way, rallying by 2.40%, with ANZ and Commonwealth Bank of Australia rising 1.63% and 1.34% respectively. Macquarie Group (+1.13%) and Westpac (+0.72%) ended the week with relatively modest gains, however.

Commodity stocks had a mixed session. Fortescue Metals Group Ltd rallied by 5.85% to lead the way, with Newcrest Mining (+1.76%) and Rio Tinto (+0.32%) also finding support. BHP Group ended the week down by 0.67%, however.

Other Asian Markets

Elsewhere, it was also a bullish week. The Hang Seng Index and the Nikkei225 rose by 0.96% and by 1.46% respectively, with the CSI300 rallying by 3.14%.

The Week Ahead

It’s a busier week ahead on the Asian economic calendar. From Australia, stats include business and consumer confidence figures in the 1^st half of the week. On Thursday, employment figures will be key, however.

From China, industrial production and retail sales figures will also draw interest mid-week.

The FED’s monetary policy decision overnight on Wednesday, along with the economic projections will be the main event of the week, however. Following FED Chair Powell’s shift in stance on inflation, will there be a shift in outlook on interest rates?

Away from the economic calendar, expect Omicron news updates to continue to influence.

For now, the key downside risk remains news of Omicron resilience to existing vaccines…