Weekly Market Recap

Australia

29/06/2020

Week in review

Eurozone and U.S. PMI manufacturing rise to 46.9 and 49.6
Eurozone consumer confidence rises to -14.7
BNZ holds rates at 0.25%

Week ahead

Australia private sector credit
China PMI manufacturing
U.S. labour market report

Thought of the week

Are equities becoming fatigued? After running so hard this quarter it may not be surprising to see them tire given how the market has responded to the pandemic compared to the economy. This week’s chart illustrates the deviation between employment in the U.S. and the S&P 500. Central banks and policy makers have a lot to do with the gap this time around. But investors are starting to weigh up the risks to the recovery from a potential second wave of COVID infections and whether the market has simply gotten too far head of the economic fundamentals and earnings outlook. We remain relatively constructive on the economic recovery over the second half of the year and the outlook for equities, however, the risks are clear and it will not be a smooth ride.

The market is not the economy

Source: BLS, Standard & Poor’s, FactSet, J.P. Morgan Asset Management, all returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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