Republish: The Monday Report – 24 October 2022

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            [0] => ((ANZ))
            [1] => ((MQG))
            [2] => ((OZL))
            [3] => ((S32))
            [4] => ((NHC))
        )

    [1] => Array
        (
            [0] => ANZ
            [1] => MQG
            [2] => OZL
            [3] => S32
            [4] => NHC
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)

This story features ANZ GROUP HOLDINGS LIMITED, and other companies.
For more info SHARE ANALYSIS: ANZ
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Greg Peel

More Whiplash

The ASX200 opened lower on Friday, attempted a rally from late morning that failed late afternoon, and closed down -53 points. Wall Street rallied on Friday night, and our futures were up 95 points on Saturday morning.

It’s all getting a bit tedious really. If we do rally by such an amount, we’ll still be firmly stuck in the October range.

Friday was all about bond yields, again, which again followed the US. The Aussie ten-year jumped 14 points to 4.19% and the two-year 13 points to 3.63%.

So real estate, utilities and industrials fell over -1%, while healthcare and discretionary fell around -0.5%.

We saw the same moves on Thursday, for the same reason, but this time the banks joined in (-1.2%) to drive the index lower.

We also saw staples down -0.9% on talk of how much the floods are going to further impact food inflation.

Energy provided some counter (+1.3%) as oil prices continue to tick up, while small gains were posted by materials and, surprisingly, technology, despite bond yields, but then tech was hammered on Thursday.

Materials was mostly supported by coal prices, with all three pure-play coal majors making the top five index winners.

But yet again, little point in delving deeper.

On Friday night, Wall Street rallied hard, the US dollar fell sharply, and while the ten-year yield was little moved, the two-year fell back hard.

Base metal prices fell despite the dollar but gold rallied sharply, and the oils were slightly higher.

So we’ll be up today. Then we have the budget tomorrow night and then on Wednesday, the CPI.

The End in Sight?

On Thursday night, the Philadelphia Fed president said “We are going to keep raising rates for a while. Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4% by the end of the year.”

On Friday night the San Francisco Fed president said “I think the time is now to start talking about stepping down – the time is now to start planning for stepping down.”

Stepping down the quantum of rate hikes, that is.

A report in the WSJ on Friday night said much the same – that there will be a 75 point hike next week but the FOMC will discuss slowing the pace thereafter.

Firstly, there has for a while been an assumption among many the Fed would go 75 in November and then 50 in December and then stop to assess the damage. Others assume the same but with further hikes into 2023.

The Philly Fed president suggested “well above 4%” by the end of the year. A 75 plus a 50 gets us to 4.25%.

The San Fran president may have sounded less hawkish, but she also said a range of 4.5%-5% “is a very reasonable estimate of where we’ll need to go.”

That’s 150-200 points more in hikes from here.

Wall Street fell on Thursday night and then surged on Friday night. Frankly, I don’t see any difference.

We did see the two-year yield drop -13 points but the ten-year actually rose one point. The US dollar did drop -0.8% but that was more about the Bank of Japan intervening to save the yen.

The stock market nevertheless managed to string together three consecutive weeks of net rallies, for the first time this year.

Attention now turns more immediately to earnings results. This week the pace picks up considerably, and the following week hits a peak. This week brings results from Meta, Google, Microsoft, Amazon and Apple.

Snap fell -29% on Friday night, having reported in Thursday night’s aftermarket, on guiding to falling ad revenue. While Snap is too small to move the dial, this has Wall Street worried about the likes of Meta and Google, and also Pinterest and Twitter.

Big Tech is also going to have been heavily impacted by the US dollar, given its global reach.

We’ll soon know.

While the first couple of weeks of the season have been encouraging, among the Dow stocks we saw AT&T shoot up on a beat last week but on Friday night rival Verizon went the other direction in falling -4.5%, while American Express posted a beat and fell -1.7%.

Intel (Dow) rose 3.4% after announcing “targeted layoffs”.

Sign of the times.

Commodities

Base metal prices continue to flip-flop on the will they, won’t they debate over the LME banning Russian trade. Friday night was a “no”, so prices dropped despite the weaker dollar.

Not so for gold, which enjoyed the dollar’s fall, particularly as this was due to central bank (BoJ) currency intervention.

And it looks like forex traders were all short the Aussie yet again. It’s up 1.9% at US$0.6397.

The SPI Overnight closed up 95 points or 1.4% on Saturday morning.

The Week Ahead

It’s a big week for US earnings results but economically, we’ll also see the first estimate of September quarter GDP on Thursday, followed by September PCE inflation on Friday.

There’ll also be numbers for consumer confidence and new home sales.

The ECB meets on Thursday and the Bank of Japan on Friday.

Global flash estimates of October PMIs are due today.

Locally, we’ve got the budget and the September quarter CPI, as noted.

It’s not an earnings season in Australia but it might as well be, given the number of stocks providing quarterly updates and/or holding their AGMs this week.

And we have earnings results this week — ANZ Bank ((ANZ)) on Thursday and Macquarie Group ((MQG)) on Friday.

Quarterlies are due today from OZ Minerals ((OZL)) and South32 ((S32)).

New Hope Corp ((NHC)) goes ex.

The Australian share market over the past thirty days…

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