The ASX in 5: the ASX 200 fights for new highs

Covid-19 cases rise in NSW

The focus in local markets remains squarely on lockdowns across Australia and the worsening Covid-19 outbreak in New South Wales. The state recorded another 136 new cases today, 53 of which were infectious in the community before being diagnosed. The situation is setting up Australia’s most important economy for a prolonged lock down, which is expected to plunge the Australian economy into negative growth for the coming quarter. Though get to truly hit the market, the expect slowdown in the economy is casting a shadow over the upcoming Australia 200 reporting period.

Euro falls on European Central Bank (ECB) policy shift

Overnight trade was highlighted by the meeting of the ECB, with the ECB delivering the results of its new strategy review. As had already been flagged by the central bank, policy would now be set according to a new “symmetric” 2% inflation target, with last night’s meeting seeing a subsequent change to forward guidance. ECB policy will now remain unchanged until inflation reaches 2% “well ahead of the end of its projection horizon.

US jobless claims jump

Despite what was a positive night for risk assets in the US, with the US 500 edging 0.2% higher, the weekly jobless claims put a small dampener on the night’s trade. The number of Americans claiming unemployment insurance jumped unexpectedly last week, with 419,000 claiming benefits, against a forecast 350,000. Though the market impact was limited, the data added to prevailing fears amongst market participants that the US economic recovery could be slowing.

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Global flash PMIs on tap

Today’s trade will be highlighted by a spate of Flash PMI Surveys released across the globe. Given the preoccupation with where the global economy sits in the cycle, the PMI surveys will provide a timely and forward-looking insight into the current state of economic activity. Forecasts are for a sustained expansion in both services and manufacturing activity in the US and Europe. The surveys already released out of Australia today were more sobering however, with services sector activity contracting heavily due to the recent lockdowns across the country.

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Output Index by sector

sa, >50 = growth since previous month

ASX 200 edges towards new highs

After recording a new record high yesterday, the Australia 200 is on the cusp of back it up with another one today, with the index managing to trade flat for most of the day’s trade. Much like what was seen on Wall Street, defensive and growth stocks have performed best today in the market, owing to a small drop in global bond yields, and cyclicals have underperformed, as investors fade the rebound in those stocks.

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