The local share market faces some headwinds at the start of the new trading week, with poor jobs data out of the US on Friday night weighing on futures markets. Commentary from the RBA will be watched closely over the coming days, as will commodity stocks ranging from uranium to gold, alumina, coal and the like.
Economic calendar and news
After last week’s data showed the Australian economy grew in the second quarter of the year, that may give rise to the prospect the country avoids a ‘technical’ recession, as defined by two successive quarters of contracting growth.
However, knowing the current state of the economy has deteriorated since, the Reserve Bank of Australia, which meets for its monthly Board meeting on Tuesday, may update the market on its forecasts, projections and policies for the rest of the year.
Although rates are unlikely to move any time soon, the central bank’s decision in August to uphold plans to unwind its bond-buying program may be revisited, with economists split over whether those plans will now be deferred in light of the lockdowns, and despite expectations the economy will grow once lockdowns are lifted.
With the Labor Day holiday in the US on Monday, there will be less news on the economic agenda over the coming days. After jobs data fell well short of expectations for August, traders may look to the latest numbers regarding jobless claims for more context on whether that result could have been an anomaly. Producer price index data, due Friday, will give more clues on the state of affairs when it comes to inflation, although expectations suggest moderating growth compared with July.
Stocks on watch
Uranium stocks put on a stand-out showing last week, and investors will be looking ahead to see whether names from this sector continue their run. Paladin Energy (ASX: PDN) was the strongest mid-to-large cap stock last week, but momentum flowed through to smaller names as well, including 92 Energy (ASX: 92E) and Valor Resources (ASX: VAL) among others. It comes as spot prices hit a multi-year high of US$35 per pound, with the Sprott Physical Uranium Trust upping its purchases of the resource and storing physical uranium.
Gold prices took off on Friday evening, fuelled by the weak jobs data in America. The precious metal is now at its highest level since late July, sitting at a resistance level that may prove decisive in terms of its next move. Regis Resources (ASX: RRL), Ramelius Resources (ASX: RMS) and Silver Lake Resources (ASX: SLR) are among the gold stocks with the most volatility tied to the underlying price of gold, yet each is still trading relatively close to 52-week lows, and the Aussie dollar has clawed back some recent losses.
After the Nasdaq hit all-time highs last week, tech stocks are still the centre of attention for many traders and investors. Semiconductor firm ASML Holding (NASDAQ: ASML) and software giant Adobe (NASDAQ: ADBE) have now reset their all-time highs on several instances over recent weeks, while software duo ServiceNow (NYSE: NOW) and Atalassian (NASDAQ: TEAM) have also followed suit.
Last week also saw the debut of a new ASX-listed ETF tracking semiconductor stocks, with the ETFS Semiconductor ETF (ASX: SEMI) now trading. The fund aims to track approximately 30 companies in developed markets, Taiwan and Korea that provide exposure to the semiconductor value chain, including foundries, fabless chip designers, equipment makers, and integrated device manufacturers.
Finally, a number of stocks could see higher trading activity on the back of a quarterly rebalance of the S&P/ASX indices, with news coming through last Friday after the market closed. Nuix (ASX: NXL) and G8 Education (ASX: GEM) are two of the names poised to drop out of the ASX 200, with Tyro Payments (ASX: TYR) set to be added. Meanwhile, Bubs Australia (ASX: BUB), Avita Medical (ASX: AVH) and Humm Group (ASX: HUM) will be removed from the ASX 300, with the likes of Sezzle (ASX: SZL), Vulcan Energy (ASX: VUL), Novonix (ASX: NVX) and Imugene (ASX: IMU) just a few of the names flagged for inclusion.
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