US markets rallied at the close of trading on Friday.
The S&P 500 closed +2.37% higher with all sectors positive with the biggest gains seen in the materials sector rising by +3.46%, followed by consumer discretionary and financials both gaining +2.92% each. The Dow was up +2.47% higher, the Nasdaq +2.31%, the Russell 2000 jumping +2.37%, while the VIX index slid -0.97% to 29.69. Big tech accounts for 20% of the S&P 500, as calculated by Reuters. Investors are keen on the results of the mega-caps, as corporate earnings continue to be published this week. BMO Wealth Management Chief Investment strategist Yu Ma emphasized the importance of mega-caps announcing positive results, “If these megacaps can’t do well, then the question is: who can do well?”. Netflix and Tesla reported positive earnings last week, while Microsoft and Alphabet’s results are expected on Tuesday, followed by Amazon and Apple on Thursday. On Friday, Netflix rose by 8%, Tesla and Amazon gained by +3.5% while Apple was up +2.7% and Microsoft +2.53%. Meanwhile, US Central bankers made it clear that the next phase in taming inflation would be how high to raise the cash rate and when to slow the pace. Keith Lerner, Chief Market Strategist for Truist Advisory Services commented,” The story this week is all about the volatility in rates, huge volatility in Treasuries.” The yield on the US 2-year bond was 4.47%, while the yield on the 10-year and 30-year bond was 4.2% and 4.33% respectively.
European market sunk on Friday due to turbulent regional conditions and weak economic data out of the UK. The Euro STOXX 600 slipped by -0.4%, weighed down by communications, consumer discretionary and real estate each receding by -1.52%, -1.4% and 1.36% respectively. The DAX lost -0.29%, the CAC fell -0.85% while the FTSE was down -0.62%. In Economic data, the consumer confidence report for Europe improved slightly by rising to -27.6 in October from -28.8 in September. While retail sales in the UK dropped more than forecast from -5.6% in -6.9% in September, as the passing of Queen Elizabeth II led to a decline in activity and rising cost-of-living pressures hit harder.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
The ASX is expected to open higher this morning as ASX futures were up 95 points or 1.42% to 6,764. The ASX closed -0.8% lower on Friday at 6676.76. Energy was the only outperformer, rising by +1.99%, while the biggest laggards were utilities, real estate, and communications falling by -2.33%, -1.82% and -1.77% respectively. In energy, Whitehaven gained +4.6% after completing a 10% share-buy back with plans to do more. New Hope soared +7.7%, Beach Energy gained +1.9% and Woodside was up +2.6%. Lithium stocks shone with Core Lithium rising by +3.4%, Mineral Resources jumped +3.1% and Pilbara Minerals was up 2%. In banking, CBA and NAB shed -1.5% each, ANX fell -1.1% while Westpac lost -0.8%. Meanwhile, Liontown Resources and Lake Resources gained 0.8% and 1% respectively, and Allkem lost -1.8%. Aldairs share price rose by +3.9% after confirming full year guidance. Life360 leapt by +7.3% after announcing a price increase in its US products, while Novonix fell -3.1% for being asked why it did not inform the market earlier of the $150 million grant it received last week. The yield on the 10 year Australian bond was 4.19%, and the Aussie dollar strengthened against the greenback by +1.6% to 63.79.
In commodities, oil prices rose with the WTI and Brent crude up by +0.64% and +1.21% to $85.05a and $93.5 respectively. Spot gold gained +1.82% to $1,657.69, spot silver jumped +4.02% to $19.42, copper was up by +1.88% to $347, nickel dropped -1.09% to $21,864, while SGX Iron Ore gained +1.14% to $90.82.
Economic Calendar:
- S&P Global Manufacturing PMI (Oct) 09:00
- RBA Kent Speech 09:05
- CHN GDP Growth Rate YoY and Retail Sales YoY (SEP) 13:00
- CHN Balance of Trade (SEP) 14:00
- S&P Global Manufacturing PMI Flash (OCT) 19:00
- US Chicago Fed National Activity Index (SEP) 23:30
- US S&P Global Composite PMI Flash (OCT) 00:45
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.
