ASX200: Weekly Wrap – 26/11/2021
Monday, 29th November
Company Gross Operating Profits (QoQ) (Q3)
Tuesday, 30th November
Building Approvals (MoM) (Oct)
Current Account (Q3)
Private Sector Credit (MoM) (Oct)
Wednesday, 1st December
AIG Manufacturing Index (Nov)
GDP (YoY) (Q3)
GDP (QoQ) (Q3)
Thursday, 2nd December
Trade Balance (Oct)
It was yet another bearish week for the ASX200, which fell by 1.58% in the week ending 26th November. In the week prior, the ASX200 had fallen by 0.62%.
While it was a mixed week on the economic data front, a Friday flight to safety across the global financial markets left the index in the red for the week.
Rising new COVID-19 cases across Europe and a new strain spreading from South Africa weighed heavily on riskier assets on Friday.
The ASX200 had been in positive territory for the week before the Friday sell-off. Adding to the market angst in the week was the reappointment of FED Chair Powell, which led to a more hawkish outlook on FED monetary policy.
It was a relatively busy week on the economic data front. Key stats included private sector PMI and new CAPEX data ahead of retail sales figures at the end of the week.
Private Sector PMIs
Australia’s prelim private sector PMIs were in focus early in the Asian session.
In November, the manufacturing PMI rose from 58.2 to 58.5, with the services PMI jumping from 51.8 to 55.0. Both sectors hit 5-month highs in the month. As a result, Australia’s composite PMI increased from 52.1 to a 5-month high 55.0.
According to the November survey,
- Easing of COVID-19 restrictions supported a pickup in private sector activity mid-way through the 4th
- Output and demand both picked up from the previous month, with business confidence improving.
- While employment conditions also improved, while price pressures persisted.
- Input price inflation soared to a survey record high in November.
The Construction Sector
In the 3rd quarter, construction work down slipped by 0.3% quarter-on-quarter, following a 0.8% increase in the quarter prior. Economists had forecast a 3.1% slide.
Private New CAPEX
In the 3rd quarter, private new CAPEX fell by 2.2% versus a forecasted 2.0% decline. Private new CAPEX had increased by 4.4% in the previous quarter.
According to the ABS.
- Buildings and structures slipped by 0.2%, while expenditures on equipment, plant, & machinery slid by 4.1%.
- While negative, the estimate for 2021-22 was raised by 8.7% to A$138.6bn.
Prelim Retail Sales
In October, retail sales jumped by 4.9% versus a forecasted 2.5% rise, according to prelim figures. Retail sales had risen by 1.3% in September.
According to the ABS,
- Food retailing fell by 0.5%, while household goods retailing increased by 4.5% in the month.
- There were also increases in retailing for:
- Clothing, footwear, & personal accessories (+27.7%).
- Department stores (+22.4%).
- Other retailing (+2.2%).
- Cafes, restaurants, & takeaway food services (+12.3%).
Economic data from the U.S raised the prospects of a more hawkish FED stance on monetary policy.
Key stats included jobless claims, inflation, personal spending, core durable goods, and 3rd quarter GDP numbers.
In the week ending 19th November, initial jobless claims fell from 270k to 199k. Personal spending was also positive, with spending up 1.3% in October.
Core durable goods orders were market friendly, rising by 0.5% in October. In September, core durable goods orders had risen by 0.7%.
An upward revision to 3rd quarter GDP numbers failed to impress, however. The U.S economy expanded by 2.1% in the quarter, revised up from a previous estimate of 2.0%. Economists had forecast 2.2% growth, however.
Negative for riskier assets, however, was a pickup in inflation. In October, the Core PCE Price Index was up 4.1%, year-on-year. The index had been up by 3.6% in September.
The Market Movers
It was a bearish week for the banks. Macquarie Group slid by 6.12% to lead the way down, with Westpac (-4.79%) also deep in the red. While Commonwealth Bank of Australia (-3.07%) and NAB (-3.22%) also struggled, ANZ fell by a more modest 0.84% in the week.
Commodity stocks had a mixed session. Fortescue Metals Group Ltd jumped by 11.12% to lead the way, with Rio Tinto and BHP Group ending the week up by 4.66% and by 4.33% respectively. Newcrest Mining bucked the trend, however, falling by 2.29%.
Other Asian Markets
Elsewhere, it was a bearish week. The Hang Seng Index and the Nikkei 225 slid by 3.87% and by 3.34% respectively, while the CSI300 ended the week down by a modest 0.61%.
The Week Ahead
It’s a relatively busy week ahead on the Asian economic calendar. From Australia, company gross operating profits and private sector credit figures will be in focus early in the week.
In the second half of the week, however, 3rd quarter GDP and trade data for October will likely have greater influence.
From China, private sector PMIs for November will also provide direction, with Caixin Manufacturing PMI numbers on Wednesday likely to have the greatest impact.
While the stats will draw interest, central bank chatter and COVID-19 news updates will remain key, however. Riskier assets could take another hit should more governments shut down borders and talk of the need to reimpose lockdowns. Of greater significance, however, would be any news updates on the new strain’s resistance against existing vaccines.