US markets closed higher on Friday after positive results from Apple and Intel offset the disappointing results from META, Microsoft, Alphabet and Amazon.
The S&P 500 was up +2.47% at the close of trading on Friday, with all sectors closing higher except consumer discretionary which fell by -0.3%. Information technology, communications services and utilities made the largest gains, closing at +4.52%, +3.03% and +2.86% respectively. The Dow was up by +2.5%, the Nasdaq jumped +2.87%, while the Russell 2000 gained +2.25% and the VIX Index dropped -5.99% to 25.75. The yield on the 10-year US treasury bonds gained 9 basis points to 4.01%. Investors’ focus will turn to the upcoming Fed policy meeting on Wednesday, with forecasts of another hike of 75 percentage points, with further hikes in December. In economic data, results from the Michigan Consumer Sentiment survey revealed consumer sentiment as forecast, rose from 58.6 in September to 59.9 in October, showing consumers are slightly more optimistic about the economy’s future prospects. The Core PCE Price Index (a preferred measure used by the Fed for measuring inflation) rose on a year-on-year comparison, from 4.9% in September to 5.1% in October slightly less than the forecast 5.2% with headline inflation unchanged at 6.2% modestly below forecasts of 6.3%. Meanwhile, declines in manufacturing and services, and falling US home sales indicate the Fed’s policies are already making an impact on the economy.
Markets in Europe edged higher for the week, with the STOXX 600 edging up +0.05. Healthcare, communications and consumer staples managed to boost the index higher closing +1.5%, +1.06% and +0.46% respectively. The biggest laggards were real estate falling -2.19%, consumer discretionary losing -1.29% and materials falling -0.54%. The DAX rose up by +0.24%, the CAC +0.46, the FTSE was down -0.27%. Ahead for the week, the focus will be on the upcoming UK central bank’s policy meeting on Thursday. Bank of America provided its expectations on the upcoming meeting, “We expect a 7-2 vote in favour of a 75bp hike at [this week’s] meeting. In the short term, we continue to expect the BoE to continue raising policy rates – recent growth and inflation data, credibility and supportive fiscal policy will justify that.”
*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 92 points or 1.36% to 6868. The ASX slid -0.87% lower on Friday, shedding 59.4 points to 6785.7. The index was weighed down by materials dropping +4.01% as iron ore prices fell . Information technology was down -2.19% and healthcare slipped -0.87%, offsetting the gains made in real estate, utilities and industrials rising +1.15%, +1.11% and +0.83% respectively. Fortescue Metals Group was down -8.2%, BHP lost -5%, Rio Tinto dropped -4.4%, while Vale was down -47% compared to a year ago after posting an EBIT of $5.7 billion. The head of commodities Baden Moore at National Australia Bank stated, “Iron ore prices [have] continued to decline after recent negative commentary from Chinese steel mills and expectations high energy prices see further reductions in steel mill utilisation rate”. In Banking, Judo Capital and Macquarie both closed flat. ANZ and Westpac gained +0.9% each, Commonwealth +0.8%, and NAB +0.3%. Vicinity Centres confirmed their guidance for 2023, helping the stock price rise +4.3% while Brainchip Holdings sunk -21.2% after reporting third-quarter results. Investors focus will shift this week on the upcoming RBA policy meeting on Tuesday, and the release of economic data results, including the retail sales report for Australia and China’s NBS Manufacturing PMI. The Australian 10-year bond yield declined -9.5 basis points to 3.735% 0.6while the local currency weakened against the greenback by -0.6% to $0.6411.
In commodities, oil prices sank with the WTI and Brent crude falling by -1.32% and -1.23% to $87.9 and $95.7 respectively. Precious metals also declined as spot gold slipped -1.11% to $1,644.86 and spot silver declined -1.74% to $19.26. Industrial metals saw copper drop -10.21% to $343, nickel receded -1.1% to $22,035, SGX Iron Ore sunk -2.84% to $78.40. The price of bitcoin rose by +1.5% to $20,660.
Economic Calendar:
- Japan Retail Sales Year-on-Year (SEP) 10:50
- Australia Retail Sales MoM (SEP) 11:30
- Chinese NBS Manufacturing PMI (OCT) 12:30
- Japan Consumer Confidence (OCT) 16:00
- UK Nationwide Housing Prices YoY (OCT) 18:00
- Eurozone Core Inflation Year-on-Year (OCT) 21:00
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.
