US equities declined amidst hawkish comments by Federal Reserve officials.
As of 3:48pm in New York, the S&P 500 was down by -0.95% on Thursday, with ten of the twelve sectors closing lower. Utilities, industrials and consumer discretionary were the biggest laggards down by -2.72%, -1.95% and -1.77% respectively. The Dow fell -0.3%, the Nasdaq fell -0.64%, the Russell 2000 fell -1.45% and the VIX index fell -1.37% to 30.34. Federal Reserve Bank of Philadelphia president Patrick Harker confirmed the Federal Reserve was likely to raise rates “well above” 4 per cent this year with similar comments from Fed Governor Lisa Cook. The yield on the US 10-year bond rose +9.9 basis points to 4.22%. In corporate news, TSLA’s share price tumbled after earnings fell below forecasts.
In Europe, markets gained after Prime Minister Liz Truss’ announcement to resign from office. The STOXX 600 edged +0.31% higher, boosted by real estate, energy and information technology all rising by +1.92%, +1.5% and +1.41% respectively. Meanwhile, the FTSE closed +1.07% higher, the CAC was up +0.76% and the DAX gained +0.2%. CEO of JP Morgan Chase & Co., Jamie Dimon, is expected to discuss the finance sector’s competitiveness in a call with UK Chancellor of the Exchequer Jeremy Hunt next week, after fears of corporate tax on lenders up to 33% began circulating. The region is in turmoil due to rising inflation, as strategists at Sanford C. Bernstein stated that forecasts are “rapidly rising” in the eurozone, with earnings seeing downward revisions.
*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 lower down, as ASX futures were down by -25 points or -0.37% to 6,701. The ASX 200 closed -1.02% lower on Thursday, with 10 out of the 12 sectors closing lower. The biggest laggards were information technology, materials and healthcare which fell by -3.76%, -2.43% and -2.13% respectively. Energy was the biggest gainer, up by +3.13% followed by financials which edged +0.04%. The stock price of lithium battery manufacturers Novonix and Piedmont Lithium rose by +7% and +8.9% respectively after revealing they had been selected by the US Department of Energy to receive $291.7 million in grants. Woodside firmed 6.2 after sharing an increase in guidance for full-year production and posting record sales. Santos rose by +2% on account of increased gas prices leading to record sales. RBC Capital Markets’ chief economist Su Lin Ong commented on the current market scenario, “While inflation remains very much in focus for the RBA and its global counterparts, the recent October RBA minutes hinted at a shifting policy debate that has begun to acknowledge the (downside) risks to ‘global and domestic growth’, rather than just upside to inflation as key to the step-down in the pace of tightening.” In economic data, the unemployment rate was flat at 3.5% in September, a near 50-year low, while a mere 900 workers were added to the workforce, well below the 25k forecast. ANZ’s economists commented, “The September labour market data were softer than expected but support the view that a 25 basis point cash rate hike by the RBA is the most likely outcome in November, even if there is an upside surprise in the Q3 CPI on Wednesday [October 26],” ANZ’s economics team told investors.” The yield on the Australian 10-year bond rose +11.5 basis points to 4.05%, while the local currency gained +0.16% to 0.6280.
In commodities, the price of oil edged lower with WTI and Brent crude down by -0.05% and -0.26% to $85.48 and $92.12 respectively. In previous metals, spot gold slid -0.05% to $1,628.69 while spot sliver was up +0.89% to $18.63. Industrial metals were mixed with copper up by +2.22% to $339, nickel rising +0.36% to $21848, SGX Iron Ore slide -0.63% to $92.05. Meanwhile the price of bitcoin fell by -0.7% to $19,073.
Economic Calendar:
- NZ Balance of Trade (SEP) 08:45
- JPN Inflation Rate YoY (SEP) 10:30
- NZ Credit Card Spending YoY (SEP) 13:00
- UK Retail Sales YoY (SEP) 17:00
- European Council Meeting 19:00
- Canadian Retail Sales MoM (AUG) 23:30
- Fed Williams Speech 00:10
- Eurozone Consumer Confidence Flash (OCT) 01:00
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.
