Stocks rose along with bonds yields lower on Thursday as investors await Chinese inflation data on Friday, as well as US producer price data.
United States
The S&P 500 closed 0.75% higher on Thursday along with the Down Jones 0.55%, Nasdaq Composite 1.13% and Russell 2000 0.63%. Producer price data for November will be released tonight, expected to show headline prices rose 0.2% over the month and a core measure excluding food and energy also rose 0.2% with both measures expected to rise at a more modest pace over the 12 months. With producer prices, a leading indicator of inflation, further signs of easing prices pressures would be welcome by both investors and the Federal Reserve ahead of the Fed’s final policy meeting for the year on December 13-14th.
In contrast to popular views on Wall Street, the Leuthold Group’s Jim Paulsen forecast the S&P 500 to rise to 5,000 in the coming 12 months, a far more bullish stance compared to other analysts. The index is currently trading near 3900, a level that has provided the pivot point for reversals on multiple occasions this year. The yield on the 10-year US treasury note rose 7 basis points to 3.49% while the VIX index retreated -2.12% to 22.2, which is “too much pessismism”, according to Ed Yardeni, President of the research with the same name. In economic data, 230k new jobless claims were filed during the week compared to 226k in the previous week. Continued jobless claims rose by 62k to 1671k, 3.8% higher than the previous week.
Europe
European equities extended the current pullback on Thursday. The Euro Stoxx 600 slid -0.09%, weighed down by communications, utilities and consumer staples which declined by -0.77%, -0.72% and -0.32% respectively. Information technology was up 0.49% and consumer discretionary firmed 0.24%. The CAC slipped -0.2%, the FTSE -0.14% while the DAX edged up 0.02%. The European Central Bank will meet for the final time in 2022 next week where it is widely expected the main refinancing rate will be increased to 2.5% from 2.0% currently. In focus on Friday is the release of Chinese inflation data expected to show prices rose 1.6% over the 12 months to November down from 2.1% previously with producer prices expected to decline -1.5% over the same period.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Australia
The ASX is expected to open higher this morning, as ASX futures were up 33 points or 0.46% to 7,214. The ASX 200 index dropped by -0.74% to close at 7175.5 on Thursday. Energy was the biggest laggard dropping -2.73%, while financials was down -0.96% and materials -0.90%. Chalice Mining was the biggest winner on Thursday, soaring 13.11% after announcing “high-grade mineralisation” at one of the company’s drilling sites, while Downer EDI plummeted -20.42% after accounting irregularities were discovered in the company’s historical earnings. Gold miners rose, with Silver Lake Resources firming 3.9%, Evolution Mining 3.6%, Newcrest Mining 2% and Northern Star 1.9%. BHP Group slid -0.8%, Rio Tinto -0.9%, Woodside Energy -4.3%. In the airline industry, Air New Zealand rose 1.4% after announcing an improvement in guidance for 2023, while Qantas fell -2.9%.
Commodities
Oil prices were down, with the price of WTI and Brent crude falling by -0.68% and -1.32% respectively to $71.50 and $76.15. Spot gold gained 0.22% to $1,790.11, spot silver +1.63% to $23.10. Copper prices rose by 0.71% to $388, with iron ore futures in Singapore 2.77% higher on Thursday and a further 0.47% higher this morning at US$109.55. Meanwhile, the price of Bitcoin rose 2.7% higher to $17,268.
Economic Data:
- China Inflation Rate YoY (Nov) 12:30
- US PPI MoM (Nov) 00:30
- US Michigan Consumer Sentiment (Dec) 02:00
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
