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What to watch on the ASX this week

What to watch on the ASX this week

Inflation data and other economic reports are expected to drive markets this week as company reporting season looms.

Australian shares advanced 1.3% last week, the second consecutive weekly increase this month, with nine of the 10 sectors in the benchmark stock index posting gains.

The S&P/ASX 200 index rose 68.6 points over five days to finish the week at 5,498.2. The gauge had climbed 5.1% in July by the close of trade on Friday, poised for its largest monthly gain since February 2015, according to Bloomberg data.

Healthcare was the best-performing sector last week after rising 4.4%, followed by utilities (+3.4%) and consumer discretionary (+3.2%). Companies in the materials sector declined 3.5%, as prices of commodities fell.

Over a week to July 22:

  • Brent oil declined 4%
  • WTI crude slipped 3.8%
  • Iron ore dropped 4.4%
  • Spot gold fell 1.1%
  • Australian dollar weakened 1.5% against the US dollar

What to watch this week

The Australian Bureau of Statistics will release the nation’s inflation data for the June quarter on Wednesday, which could impact markets.

CommBank expects the headline consumer price index to rise by 0.5% in the second quarter.

“Outcomes in line with our forecasts would make a rate cut in August more likely than not,” senior economist Gareth Aird said in a note on Monday.

Other Australian economic data scheduled this week includes export and import prices for the June quarter, which will be published on Thursday, and the producer price index, a key measure of business inflation, on Friday. 

“It will be important to see what impact the volatile Aussie dollar has had on prices of imported goods across the docks,” said CommSec.

In the US, the Federal Reserve Open Market Committee will meet over Tuesday and Wednesday to decide on its monetary policy, the result of which will be available at 4am Sydney time on Thursday.

“The guessing game on when the Fed will next lift rates probably won’t be resolved,” said CommSec economist Savanth Sebastian.

“However the text of the decision will be important in determining whether the Fed is on course to lift rates later this year or whether it is likely to be delayed again.”  

The US earnings reporting season continues this week, with companies set to announce their results including Apple, Exxon Mobil, Facebook and Ford Motors. 

Meanwhile, ASX-listed Woolworths said in a statement this morning that it will include a significant charge of $959m ($766m after tax) in its earnings for the 2016 financial year, following a group restructuring.

The company said it plans to cut 500 jobs and shut underperforming or unprofitable stores, and is looking at options to sell its EziBuy business.

Stock movers

Below are the best- and worst-performing ASX 200 stocks for the week ended Friday, July 22.

Company/Index

ASX code

Weekly price change

Mantra Group

MTR

+16.6%

Programmed Maintenance Services

PRG

+8%

Aristocrat Leisure

ALL

+7.8%

Sirtex Medical

SRX

+6.8%

Lendlease Group

LLC

+6.6%

S&P/ASX 200

XJO

+1.3%

St Barbara

SBM

-10.2%

Syrah Resources

SYR

-12.2%

Northern Star Resources

NST

-12.6%

CIMIC Group

CIM

-17%

Asaleo Care

AHY

-34.3%

Past performance is not a reliable indicator of future performance. Source: Bloomberg

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. The inclusion of companies in this article does not constitute a recommendation and it’s vital to remember that the value of shares in any company can fall as well as rise, which means you could lose money by investing in them. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.