Global equities rose ahead of Thursdays inflation data, as expectations grow that prices will ease further, offsetting a downward revision in global growth from World Bank.
A speech by Jerome Powell on Tuesday refrained from directly commenting on the outlook for monetary policy, noting “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise rates to slow the economy”. Meanwhile, the World Bank lowered its US growth forecast for 2023 to 0.5%, down -1.9% from their previous forecast. Investors seek a sign of relief in the upcoming CPI report to be released on Thursday, expected to show headline prices eased to 6.5% from 7.1% along with core prices to 5.7% from 6% previously.
The S&P500 gained 0.70% along with the Down Jones 0.56% with the Russell 2000 and Nasdaq Composite pacing gains despite higher yields, rising 1.45% and 1.01% respectively. Meanwhile, the US 10-year note was 7.6 basis points higher to 3.606% and the VIX index dropped -5.96 % to 20.66. In corporate news, a survey by JP Morgan analysts forecasts META to be the top performer this year, followed by Amazon, while Netflix is expected to be the worst-performing stock.
The World Bank forecast that European growth will also be lower in 2023 than previously expected, with growth in the region set to decline to 0%, a decrease of -1.9% from the prior projection. The Euro Stoxx 600 index closed -0.59% lower on Tuesday along with the CAC -0.55%, DAX -0.12% while and the FTSE slid -0.39% lower. The Prime Minister for France, Elisabeth borne faced criticism after reforms were made to the French pension system, stating workers should work an additional two years longer to the age of 64. Meanwhile, in corporate news, BMW branded car deliveries fell 5% to 2.1 million last year while still outselling Mercedes-Benz for the second year in a row.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
In commodities, oil rallied with WTI and Brent crude rising 0.8% and 0.67% to $75.24 and $80.18 respectively. Spot gold prices edged up by 0.36% to $1,878.52, spot silver receded -0.09% to $23.63. Copper rose 1.22% to $408, nickel -2.47% $27,230, SGX Iron Ore -0.55% to $118.
The ASX is expected to open higher today as ASX200 futures are 30 points or 0.42% higher at 7,107. The ASX was weighed down by materials declining by -0.55%, industrials by -0.53% and utilities -0.48% on Tuesday with the benchmark finishing -0.28% lower. Communications and consumer discretionary were the top performers gaining 0.23% and 0.16% respectively. Lithium stocks led the gains in the market, with Lake Resources rising 1.2% after displaying higher production. BrainChip Holdings fell -7.5%, Premier investments was down -5.1%, Lovisa lost -0.3%. Meanwhile, economic data revealed a rise in online shopping and orders by 6.3% during the holiday season. The yield on the Australian 10 year bond was little changed 3.71%, while the local currency declined by -0.29% to 0.6892.
This article was written by Oliver Gordon, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
