The ASX200 experienced a mixed week, looking on track to record a positive week before a poor lead from the US on the final day dragged the index down. Also weighing on the index was the extension of the Sydney lockdown, and news that the lockdown is likely to be extended past the 16th of July.
The three US majors all recorded new closing highs on Friday, as investors shook off concerns that economic growth was starting to slow down, along with fears that the Delta variant could impact the US economy. US investors eyes now switch focus to reporting season, which starts this week.
Despite suffering its worst loss of the year on Thursday, the Euro Stoxx 600 still managed to eke out a positive week on the back of signs that Europe’s economic growth prospects are better than those of the US, at least for now. With surging cases of the Delta variant, there are however concerns that new restrictions will be placed on Europeans.
For a second straight week, all of the Asian majors experienced red weeks, with CSI 300 the relative outperformer, only dropping 0.2%, while the Nikkei 225 and KOSPI fell 2.9% and 1.9% respectively, on the back of rising COVID case numbers. The Hang Seng fell 4.1%, as fears of tighter regulations from Beijing weighed heavily.
Precious metals experienced a mixed week, which was at least partially explained by the difference in their uses. Gold continued its rally to reach back above the significant $1,800 mark, with an expected slowdown in economic growth boosting the appeal of the safe haven metal – especially as the slowdown in recovery decreases the chances of an earlier than expected interest rate rise. Silver’s underperformance has the same catalyst however – a slow down in economic growth decreases the industrial appeal for silver.
WTI Crude and Brent Crude fell 1.0% and 0.8% respectively last week despite a 7th consecutive decline in US oil inventories, as oil traders digested the impact of abandoned OPEC+ talks, which meant that an agreement to increase production wasn’t implemented after a dispute between Saudi Arabia and the UAE. While tight supply is good for oil prices on paper, traders fear that OPEC+ members might start to produce above their quotas to take advantage of higher prices and demand, which would see the oil market get flooded.
Iron ore prices rose marginally last week as stockpiles of imported iron ore in Chinese ports experienced their 4th consecutive week of declines. This was driven by news that Australia’s iron shipments to Chine disappointed in June, which implies that Australia’s iron ore giants won’t be able to make the most of the ongoing elevated iron prices.
Copper experienced an extremely choppy week, with no consecutive movements in the same direction as a variety of data points and news stories impacted copper markets. On the positive side, Shanghai Futures Exchange warehouses reached their lowest inventory levels since mid-February, while global smelting activity (and thus supply of copper) decreased in June as Chinese plants closed for maintenance. Of the negative side however, Chinese bonded warehouse stocks reached their highest levels in two years, while data revealed that German manufacturing orders in May experienced their biggest fall since April last year.