Daily Commentary BY THE CURVE TEAM –

Virus Numbers and Volatility Both Rise

14th of July, 2020

After the reimposition of lockdowns in Victoria, there is now an increasing chance of further rollbacks in NSW.

Case numbers yesterday in NSW showed signs of a reemergence of community transmission with several licensed venues and a large suburban shopping centre with known attendance of infected persons. Geographically, this NSW outbreak is arguably more concerning than the one in Victoria, not due to size or numbers but simply due to the location alongside two major freeways and without a known source. In response the NSW Premier is set to roll back restriction on Pubs and Clubs today.

For the economy, the risk is that with the Melbourne CBD already vacated that the Sydney CBD may soon follow. Anecdotally, there are already businesses who have returned to working from home arrangements and many other watching case numbers closely over the next few days.

In markets offshore overnight, US equity showed some worrying echoes of the 2000s tech bubble. The intraday movement in key share indices, the S&P500 and NASDAQ, the later of the two rose 2% before falling 4% to close down just over 2%. The last time we saw that trading pattern in the NASDAQ was 3 days before the peak fo the Tech Bubble in the early 2000s. One standout overnight was the movement in Tesla Shares, they rose 16%, touched an all time high of $1794.99 before closing 3.08% lower than their opening price just below 1500USD.

In ratings news yesterday S&P affirmed the BBB+ credit rating of AMP Bank despite downgrades of the wider AMP Group and holding companies. After the sale of AMP life that went through at the close of the last financial year they now see the bank as a core component of the group.

Data today will be highlighted by the NAB Business Survey and high frequency weekly payroll and wage date from the ABS out mid morning. Later today Curve will release their latest monthly insights.

Matthew Dunshea

Client Relationship Manager