A positive session from Wall Street on Friday has provided an encouraging backdrop for the local market this morning, with futures suggesting potential gains at the open. The Federal Reserve is likely to occupy headlines this week amid taper talk, while closer to home it is tech stocks set to lead earnings.


Economic calendar and news

The focus of the coming week will be the Federal Reserve’s annual symposium, which is expected to be dominated by discussion around taper talk and a shift in monetary policy. Although we have seen in recent weeks some officials begin to frame expectations for the central bank’s bond-buying program to be wound back, a number of economists believe the Fed will use this event to provide greater clarity around a timeline for that shift to commence.

Among other items on the agenda in the US, manufacturing and services data will be published, as will durable goods orders, personal income and spending, including the Fed’s preferred reading on inflation in the PCE Price Index, and a second estimate for 2Q GDP growth.

Locally, we’ll receive a preliminary reading into retail sales for July, but otherwise, a quiet week for economic data will likely play second fiddle to the latest data on the delta outbreak and accelerating vaccination levels, plus discussions around targets for the economy to reopen. 



Stocks on watch

With the bulk of reporting names set to deliver earnings over the coming days, it is set to be an eventful week across the ASX. Kicking things off on Monday are the likes of Sonic Healthcare (ASX: SHL) and Altium (ASX: ALU), with the former at record highs amid a surge in coronavirus testing numbers, and the latter having recently knocked back a takeover bid from Autodesk on the premise of its strong growth prospects.

Tuesday will see the likes of Seek (ASX: SEK) and Kogan (ASX: KGN) hand down earnings, with the official unemployment rate last week tipping to a 12-year low at 4.6%, and online shopping taking precedence in the midst of lockdowns across New South Wales and Victoria. Also reporting will be names such as Boral (ASX: BLD), Oil Search (ASX: OSH) and Alumina (ASX: AWC).

Two of the stocks most likely to be scrutinised closely in reporting season will report on Wednesday in buy-now pay-later duo Afterpay (ASX: APT) and Zip Co (ASX: Z1P). The takeover bid hanging over Afterpay has shaken up the sector, but in the wake of Sezzle’s results last week, one watch-point may well be the level of uncollectibles and bad debts. Other shares on the radar that day will be Iluka Resources (ASX: ILU), WiseTech Global (ASX: WTC), Medibank Private (ASX: MPL) and Adbri (ASX: ABC), to name a few.

The following day, Qantas (ASX: QAN) reports, with the company’s outlook likely to be the most-watched aspect of its results. Although results in the period ending June may reflect the impact of domestic travel returning, since then, with locked borders and a significant outbreak of the delta strain, the company’s timeline on widespread travel and its projected cash burn will be important. 

There are also a number of other high-profile stocks reporting on Thursday, including Appen (ASX: APX), A2 Milk (ASX: A2M), Woolworths (ASX: WOW), Whitehaven Coal (ASX: WHC) and Flight Centre (ASX: FLT), while Wesfarmers (ASX: WES) will be the major name rounding things out on Friday.

Energy shares might face some turbulence to start the week, with crude oil prices sinking throughout the Friday night trading session overseas. Futures for WTI crude oil slipped from as high as US$63.77 per barrel when the ASX closed on Friday to US$61.86 by Saturday morning. The move could influence trading in Woodside Petroleum (ASX: WPL) and Beach Energy (ASX: BPT), which both hit multi-month lows last week.

Iron ore shares have seen significant volatility in recent weeks with the price of the commodity plunging from record highs. Although miners are still capturing enormous profits at these relative highs, some of the momentum has turned against companies like Fortescue Metals (ASX: FMG) and Mineral Resources (ASX: MIN), so movements in the commodities market will play a role in the coming days. 

Chinese US-listed stocks continue to see pressure, with further rumblings of regulatory action weighing on a host of companies, predominantly in the tech space. Alibaba (NYSE: BABA) and JD (NASDAQ: JD) hit new 52-week lows last week, while Pinduoduo (NASDAQ: PDD) and Baidu (NASDAQ: BIDU) also turned sharply lower before paring losses on Friday.

Faring much better among international investors has been stocks like Microsoft (NASDAQ: MSFT), Johnson & Johnson (NYSE: JNJ), UnitedHealth Group (NYSE: UNH), Adobe (NASDAQ: ADBE) and Cisco (NASDAQ: CSCO), which have each hit a yearly high in the last week amid swelling positive momentum.


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