US equities fell on Wednesday as markets processed economic data, corporate earnings, and the news of a potential reduction in the pace of interest rates hikes began circulating wall street.
The S&P 500 fell by -0.74%, weighed down by communication services, information technology and consumer discretionary declining by -4.69%, -2.13% and -0.9% respectively. The Dow edged up +0.03%, the Nasdaq slipped -1.9%, the Russell 200 fell -0.74%, while the VIX index fell -1.86% to 28.07. In an unexpected move, The Bank of Canada slowed down the pace of interest rate hikes raising interest rates by +0.50% instead of the +0.75% forecast. Oanda’s Edward Moya commented, “A Canadian dovish surprise gave risky assets an unexpected boost.” Reports of losses from Apple and Microsoft brought the market further down. Economic data revealed the impact of rising interest rates. Retail inventories fell to -0.1% from last month’s 0.7%, the consumer confidence index was below expectations at 102.5, while sales of new homes continued to decline in September despite a decline in home prices. The yield on the 10-year US bond slid 8 basis points to 4.02% on speculation that central banks are set to begin to slow the pace of tightening. In focus tonight is the release of Q3 GDP expected to show the economy advanced at a +2.4% annualized rate, while the Atlanta Fed’s GDP Now forecasts a rate of +3.1%.
In Europe, The STOXX 600 closed +0.59% higher. Materials was up +1.55%, industrials rose +1.53% and healthcare gained +1%. The FTSE edged up +0.45%, the CAC gained +0.41% and the DAX was up +1.09%. The new UK PM Rishi Sunak delayed the release of a plan to repair the country’s public finances until November 17th which according to one economist may save as much as 15 billion pounds and spare the public services deep spending cuts. In focus tonight is the ECB rate decision where the central bank is expected to raise interest rates by +0.75% to 2%.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
The ASX is set to open higher today, with ASX futures up 36 points or 0.53% to 6,835. The ASX closed +0.18% higher on Wednesday, as gains in real estate, utilities and industrials boosted the index by rising +2.48%, +2.42% and +0.9% respectively. Consumer staples stocks declined, with Coles Group down by -2.7% due to sales rising by only 1.3% to 9.89 billion. Woolworth’s stock price fell by -3.2%, despite the company yet to publish its earnings next week. Costa Group rallied +10.8%. Endeavour Group, the parent of Dan Murphy’s, suffered a decline of -4.6%. BHP Group edged up 0.1% while Rio Tinto managed climbed +0.6%. Woodside energy was down -1.1%. Iluka Resources secured strategically important feedstock to edge up +1.6%. Medibank’s share price plunged 18% after the company admitted to a data leak of every single customer’s private information. Whispir sank -24% due to declining sales. Tabcorp gained 1%, while Australia and New Zealand Bank rose 0.5% despite being ordered to pay $25 million fine for failing to provide customers benefits it had promised them. The yield on the 10-year Australian bond declined -15.7 basis points to 3.918% while the local currency strengthened +1.50% to 0.6490. In economic news, CPI rose above expectations to 7.3% on a year-on-year basis, up from 6.1% from the previous quarter, higher than the forecast 7%.
In commodities, oil prices were up with the price of WTI and Brent crude rising +3.05% and +2.32% to $87.97 and $95.73 respectively as a larger than-expected decline in gasoline inventories -1.78m vs -805k offset a build in crude inventories of +2.588m vs +1.029m forecast. Precious metals saw spot gold up +0.72% to $1,664.96 while spot silver increased gained +0.93% to $19.53. Industrial metals were up with copper soaring +4.15% to $354, nickel rose by +0.29% to $22,216, while SGX Iron ore fell by -2.06% to $88.79. The price of bitcoin increased by 3.6% to $20,829.
Economic Calendar:
- Chinese Industrial Profits Year on Year (SEP)12:30
- German GfK Consumer Confidence (NOV) 17:00
- Chinese FDI (YTD) YoY (SEPT) 18:00
- ECB Interest Rate Decision 23:15
- US GDP (QoQ Q3) 23:30
- US Jobless Claims 23:30
- ECB President Lagarde Speech 01:15
- BOE Woods Speech 02:30
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.
