The week ahead looks set to start with local shares trading on the back foot courtesy of a weak lead from overseas, and wider lockdown restrictions likely to weigh on investor sentiment. Look out for quarterlies from local gold and energy shares, while US reporting season welcomes tech names.
Economic calendar and news
After a standout jobs report last week, where the unemployment rate tipped below 5% in a move few experts would have anticipated months back, this week’s attention turns to the minutes from the most-recent RBA Board meeting.
There will also be preliminary retail sales data for June, which is tipped to slide by around half a percent, followed by manufacturing and services activity figures on Friday.
Abroad, the United States will release the latest data on building permits, housing starts, crude oil holdings and jobless claims.
Ten-year Treasury yields will also draw eyes on the back of a slide in the back-half of last week, with the figure slipping to 1.3% on Friday after trading above 1.4% earlier in the week. Weighing on yields have been concerns about an economic slowdown, below-forecast issuance of new bonds from the Treasury, and repositioning among those who were seeking to bet against bonds.
Stocks on watch
The second week of the US earnings season sees a range of companies from tech, travel and the pharmaceutical industry line up to report. This includes Netflix (NASDAQ: NFLX), IBM (NYSE: IBM), Intel (NASDAQ: INTC) and Twitter (NYSE: TWTR), United Airlines (NASDAQ: UAL) and American Airlines (NASDAQ: AAL), plus the likes of Johnson & Johnson (NYSE: JNJ) among others.
Tech shares were the biggest drag on US markets last week, even as bond yields fell. Friday in particular was a difficult day for some of the leading names in this segment, which could have a flow-on effect for ASX-listed tech stocks when the new week begins.
Already, Afterpay (ASX: APT) has been under pressure on the back of competition from offshore rivals, but the weak lead may also impact the likes of Appen (ASX: APX), WiseTech Global (ASX: WTC) and Xero (ASX: XRO), which bucked that trend during trading on Friday before US markets fell.
Iron ore prices continue to sit well above US$200 per tonne, and that’s a positive tailwind for the nation’s largest miners in this sector, which were among the best-performing ASX large-caps last week. On Tuesday, BHP (ASX: BHP) will provide its operational review for the year ended 30 June 2021, which follows last week’s results from Rio Tinto (ASX: RIO) announcing its shipments were down 12% versus a year ago.
Other companies lining up to hand down quarterly reports this week include but are not limited to energy duo Santos (ASX: STO) and Beach Energy (ASX: BPT), as well as gold miners Northern Star Resources (ASX: NST) and Newcrest Mining (ASX: NCM).
Amid the extension of lockdown restrictions, particularly in New South Wales, shares leveraged to the construction industry may see above-average volume this week as the market takes into account the impact. Some names from this sector include contractor giants Lend Lease (ASX: LLC) and Cimic (ASX: CIM), as well as materials suppliers such as Boral (ASX: BLD), James Hardie (ASX: JHX), Adbri (ASX: ABC) and CSR (ASX: CSR).
Last but not least, a couple of momentum stocks on investors’ radars include the likes of Sonic Healthcare (ASX: SHL) and Suncorp (ASX: SUN), which both hit 52-week highs last week.
The most-active shares from the US paint a different picture, however, with AMC Entertainment (NYSE: AMC) tanking nearly 25% last week on more than 125 million shares trading hands.
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