Australian Markets Weekly: Greek tragedy and postcard from Asia

This week we cover the weekend’s events in Greece and China along with impressions from Asian investors following a two-week trip marketing Australia through Singapore, Hong Kong, Tokyo and China.

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This week we cover the weekend’s events in Greece and China along with impressions from Asian investors following a two-week trip marketing Australia through Singapore, Hong Kong, Tokyo and China.

  • Unsurprisingly, equities, the EUR, $A and $NZ are weaker and safe-haven assets – gold, Treasuries and other government bonds, the JPY and USD – bid following Greece’s somewhat unexpected turn of events. This situation can be expected to continue until some resolution occurs. China’s decision to further ease rates on the weekend will be overshadowed by Greek developments, but suggests Chinese growth continues to slow more than the authorities desire, which is likely to keep broad downward pressure on the $A.
  • A recent marketing trip through Asia revealed very downbeat views on the Australian economy (in spite of better than expected unemployment trends of late) and the expectation that the $A would continue to ease. The RBA has confused Asian investors recently, with most expecting little further easing. There remains very strong interest and concern over Australian house prices. We see house price developments as varying substantially on a regional basis, with those areas most exposed to mining most at risk but prices still rising in some cities.
  • This week we look for a reasonable retail sales outcome for May and an improved trade deficit on lower imports and stronger iron ore exports. The RBA Governor speaks in London on The Changing Landscape of Central Banking Tuesday night Australian time, though this may not have too much new given the proximity of the next RBA Board meeting next week. The key focus of markets for much of the week will of course be Greek developments, though Friday night will also see the release of the latest non-farm payrolls report, which is likely to show strong payrolls growth, consistent with the Fed beginning to tighten in September.

For a full synopsis of the markets this week download:

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