U.S. equities traded higher on Tuesday although pared larger gains of as much as +2.31%.
As at 3:40pm on Tuesday in New York, the S&P 500 was up 0.73%, with all sectors trading higher and 88% of stocks up. Industrials, utilities and materials made the highest gains of +1.93%, +1.69% and +1.38% respectively. The Dow was up 1.12%, the Nasdaq Composite gained +0.85%, the Russell 2000 rose +0.76%, while the VIX index declined -1.24% to 30.98. The yield on the US 2-year bond was 4.43%, while the yield on the 10-year and 30-year bond was 3.99% and 4.015% respectively. Senior analyst at Oanda, Craig Erlam spoke about the current market sentiment, “The economic landscape looks treacherous, and we don’t even know if we’re at peak inflation and interest rate pricing yet. Those are substantial headwinds that will make any stock market rebound extremely challenging.”
In economic data, the Industrial Production report for September showed manufacturing output increased by 0.4% in September compared to the previous month. Meanwhile, the NAHB/Wells Fargo Housing Market Index fell to 38 in October, below forecasts. Goldman Sachs opened the reporting season, providing positive results for investors with the share price rising +2.07%. Meanwhile, Netflix is expected to share results after the close, with investors keen on seeing if the streaming giant is able to return subscriber growth to forecasted numbers. Art Hogan, the chief market strategist at B. Riley commented on the importance of corporate earnings reports, stating, “Earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream.”
In Europe, markets closed higher on Wednesday. The Euro STOXX 600 rose by +0.65%, with 83% of the index closing higher. Industrials, financials and information technology made the biggest gains, climbing +1.61%, +1.0% and 0.92% respectively. Energy was the biggest underperformer, falling by -1.46%, followed by real estate sliding -0.32%. The FTSE rose +0.93%, the CAC climber +0.44% while the DAX edged up 0.92%. Investors are awaiting signs of further volatility in the UK, after the Bank of England reaffirmed it’s plans of buying bonds. The chief investment officer at Flowbank SA, Esty Dwek, commented on the impact of the UK policy reversal that it “will bring some calm, but there are still a lot of questions about the growth prospects for the UK, so it is not out of the woods yet.”
*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 lower today, with ASX futures down 38 points or -0.56% to 6,744. The ASX closed 1.7% higher on Tuesday, with 92% of the index closing in green. Energy was the only underperformer, receding -0.6%, while information technology, real estate and communication services lead the index gaining +4.18%, +3.21% and +2.26% respectively. In miners, shares of gold miner St. Barbara sunk -21.6% after the company admitted to higher than forecast rise in their production costs for the first quarter, leading to lower margins. Meanwhile Newcrest Mining gained +4.6%, to $17.74 while Ramelius Resources edged up by +0.8%. BHP Group climbed +1.4%, Rio Tinto gained +0.1%, while Woodside Energy fell -0.8%. Brambles confirmed growth in sales between the range of 7-10%, resulting in a rise of 0.3% in the company’s stock price. Tyro confirmed a proposal by Westpac to acquire the payment business, with Tyro stock price adding +1.9%, while the latter gained +2.4%. Treasury Wine Estates added +2.1% after confirming first quarter 2023 trading and group earnings were in line with expectations. The minutes from the RBA’s meeting revealed that members had agreed the 2.6% rate was “not at an especially high level” and that consumption had remained resilient to rate increases. The yield on the 10-year Australian bond was -10.4 basis points lower to 3.919%, while the local currency was up +0.1% to 0.6304.
In commodities, the price of WTI and Brent Crude fell by -3.05% and -1.69% to $82.83 and $90.01 respectively. In precious metals, spot gold gained +0.05% to $1,650.87 while spot silver was up +0.11% to $18.67. Industrials metals were mixed, with copper down -0.23% to $336, nickel declined -1.15% to $21,411, SGX Iron Ore fell -2.3% to $91.61. Meanwhile, the price of bitcoin receded 0.6% to $19,403.
Economic Calendar:
- AUS Westpac leading index (MoM Sep) 10:30
- UK Inflation (YoY Sep) 17:00
- Eurozone Inflation Final (YoY Sep) 20:00
- Canada Inflation (YoY Sep) 23:30
- US Fed Kashkari Speech 04:00
- US Fed Beige Book 05:00
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.
