Markets Week Ahead: Central banks to guide sentiment, while the Government mulls Singapore travel bubble

Markets Week Ahead: Central banks to guide sentiment, while the Government mulls Singapore travel bubble

It was a mixed finish to the week for US indexes on Friday as the rotation from growth to value rolled on. For the first time since 2016, it was the fourth week in a row where the tech-heavy Nasdaq underperformed the Dow Jones. 

As it stands, the ASX is looking at a subdued open, with futures more or less flat. Central bank activity will be a major theme, as will February’s unemployment figures and new travel bubble speculation.

 

Economic calendar and news

Keep an eye out for key jobs data emerging over the coming days, which takes centre stage on Thursday. According to economists’ estimates, the official unemployment rate is anticipated to drop from 6.4% to 6.3%, with forecasts suggesting as many as 35,000 new jobs may have been added to the economy last month. 

Elsewhere, preliminary retail sales data for February is expected to show a modest uptick, which would be a positive outcome given the progressive winding-back of stimulus support in recent months. 

The Reserve Bank of Australia will also take on a special focus over the coming days. First, RBA Governor Philip Lowe will speak to the Melbourne Business Analytics Conference to kick off the week. 

Assistant Governor (Financial Markets) Christopher Kent is also pencilled in to address the Australian Finance Industry Association and ISDA Virtual Conference on Benchmark Strategies on Wednesday and Thursday respectively. In between, Tuesday will see the minutes of the March Monetary Policy Meeting published.

Overseas, US retail sales will be released, with the data expected to show a modest contraction after a bumper January reading. There will also be indicators for industrial and manufacturing production, export and import prices, building permits and housing starts, plus a highly-anticipated Federal Reserve meeting, which will be accompanied by an official publication of its economic projections – something that may hold sway over Treasury bond yields.

 

 

Major movers

After a solid performance last week, ASX travel shares will likely continue to see elevated trading volumes as investors digest the future outlook for these companies in the wake of the government’s push to drive tourism. Furthermore, weekend news relating to a possible mid-year travel bubble with Singapore, which could also later function as a quarantine hub for third-party countries, may spark added interest, even if many hurdles remain. 

Flight Centre (ASX: FLT) and Webjet (ASX: WEB) were two major movers last week, while abroad, strong support for the likes of Boeing (NYSE: BA) and American Airlines (NASDAQ: AAL) on Friday may also help sector sentiment. If the travel bubble proceeds, it may open the gateway to student migration, a potential bonus for international education organisation IDP Education (ASX: IEL).

One area that has been out-of-favour in the US amid the tech sell-off has been the major Chinese e-commerce marketplaces. Flying high not all that long ago thanks to their huge captive audiences, the likes of JD.com (NASDAQ: JD), Alibaba (NYSE: BABA) and Pinduoduo (NASDAQ: PDD) have shed a significant portion of their respective valuations in recent weeks as regulatory concerns also weigh.

Meanwhile, local building materials companies have been on a solid run of late. Boral (ASX: BLD) and Fletcher Building (ASX: FLU) hit new 52-week highs, albeit this contrasts prominent construction contractor Cimic Group (ASX: CIM), which is circling multi-month lows. 

Elsewhere, some other names entering the new trading week full of momentum and at yearly highs have been those leveraged to unfolding thematics. These include Eagers Automotive (ASX: APE), thanks in no small part to a resurgent car market, Corporate Travel Management (ASX: CTD) amid open borders, and Champion Iron (ASX: CIA) due to robust iron ore prices.

Last but not least, a couple dividend stocks for investors to monitor are shipbuilder Austal (ASX: ASB), and poultry supplier Inghams Group (ASX: ING), which both trade ex-dividend.

 

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