Daily Market Reports | Jan 11 2024
| World Overnight | |||
| SPI Overnight | 7456.00 | + 11.00 | 0.15% |
| S&P ASX 200 | 7468.50 | – 52.00 | – 0.69% |
| S&P500 | 4783.45 | + 26.95 | 0.57% |
| Nasdaq Comp | 14969.65 | + 111.94 | 0.75% |
| DJIA | 37695.73 | + 170.57 | 0.45% |
| S&P500 VIX | 12.69 | – 0.07 | – 0.55% |
| US 10-year yield | 4.03 | + 0.01 | 0.27% |
| USD Index | 102.41 | – 0.13 | – 0.13% |
| FTSE100 | 7651.76 | – 32.20 | – 0.42% |
| DAX30 | 16689.81 | + 1.45 | 0.01% |
By Rudi Filapek-Vandyck
Greg Peel will return later this month.
Iron ore pricing is under pressure. Energy cannot find solid footing. Industrial and precious metals are simply oscillating around lots of nothingness.
But US equities won't be deterred, having set their sight on new all-time record highs. Yesterday's inflation update in Australia confirmed what the market has been pricing in since the closing quarter of 2023; inflation is falling. What will/should central bankers do?
The USA will have its own CPI update later today (Friday morning Sydney time). Market consensus is reportedly looking for a 0.2% m/m rise in the headline and 0.3% m/m rise in the core measure.
US treasuries have settled above 4% yield yet again, and for the time being, they seem to be comfortable at that level (4.03% overnight).
Returning to the the monthly Consumer Price Index (CPI) indicator released yesterday in Australia, the November result came in as 4.3% y/y, the lowest rate since January 2022. Economists at ANZ Bank comment the October and November prints make it difficult for Q4 2023 CPI inflation to exceed the RBA's forecast of 1.0% q/q, supporting the bank's core view of no change to the cash rate at the RBA's February meeting.
Yesterday's trading session locally proved in particular punishing for small-cap miners and biotech hopefuls, as also illustrated by our daily update: https://www.fnarena.com/index.php/2024/01/10/asx-winners-and-losers-of-today-10-01-24/
One interesting tidbit, potentially, is data analysis by S&P Global Market Intelligence suggesting retail investors were not joining the rally in US equities in December. The S&P500 nearly reached an all-time high in late December, but retail investors were not buying. According to the analysis, retail investors sold off more than US$25.92bn in shares throughout the month, up from the US$23.63bn they apparently sold off in November.
Data from S&P Global Market Intelligence shows it was the fastest pace of selling in years.
Rania Gule Market Analyst at XS.com reports:
The US market is gearing up for the start of the new earnings season, with major banks beginning fourth-quarter releases next Friday.
The Consumer Price Index (CPI) for December is set to be released on Thursday, providing further signals about the timing of interest rate cuts by the Federal Reserve. On Friday, a significant number of high-profile banks and financial institutions, including BlackRock (BRK), Wells Fargo (WFC), Bank of America (BAC), JPMorgan (JPM), and UnitedHealth Group (UNH), will announce their financial results for the quarter ending in December. This is expected to have a definite impact on the short-term and medium-term movement of stock market indices.
Currently, the stock market appears to be undergoing a corrective pullback from the highs of December, entering a consolidation phase after the substantial increase starting in November from the $4,100 level. However, the upward trend seems to remain active in the medium term, as investor sentiment remains optimistic.
The AAII investor sentiment survey released last Wednesday showed that 48.6% of individual investors are still optimistic, surprisingly higher than the previous reading of 46.3%. The AAII index is considered a contrarian indicator, meaning extremely high readings may indicate excessive satisfaction and lack of fear in the market, while low readings support market increases.
Stock indices are likely to remain stable today in a sideways direction, with potential attempts to test the 4,700 level. Market participants are eagerly awaiting the release of the crucial Consumer Price Index tomorrow (Thursday) and the commencement of the new earnings distribution season on Friday.
The likely scenario is to stay within the 4,700 to 4,800 range despite the dip below 4,700 last week. Therefore, it is advisable to shorten the trading time frame, looking for buying opportunities at support levels and bottoms and selling at resistance levels and peaks.
Samer Hasn Market Analyst and part of the Research Team at XS.com reports:
Euro was able to achieve some gains of 0.17% against the US dollar (EUR/USD) and reached the level of 1.09549 at the peak of the session’s highs, after a sideways path that witnessed some fluctuations later. Against the British pound (EUR/GPB), the euro touched the level of 0.86166 at 7:45 this morning, which is slightly close to the highest levels this week.
The euro's mixed performance today come despite positive data for French industrial production and Italian retail sales, which came in conjunction with the weak performance of Eurozone bond yields.
Today we saw industrial production figures in France for November last year. On a monthly basis, industry output saw growth of 0.5%, which was higher than expectations of 0.1% and also represents the fastest pace since last July. The three months ending in November also recorded a growth of 0.8% compared to the same period last year.
While this growth came with a noticeable recovery in machinery and equipment production by 2.8% compared to 0.7% last October. In addition, mining, energy and water supply rebounded by 1.8% after a previous contraction of 2.7%.
On the other hand, we witnessed a noticeable decline in transportation equipment manufacturing by 5.5% after a previous growth of 9%. However, transportation items are usually very volatile in nature. Energy-intensive industries that rely heavily on also continued to record low levels of production due to the rise in electricity and gas costs during the year 2022, which is the period for concluding contracts for the following year to supply energy, which consequently led to a reduction in production levels.
As for Italy, retail sales recorded a higher-than-expected growth for the second month in a row at 0.4%, but they contracted by 0.1% during the three months ending in November as well compared to the previous three months. While the value of retail trade continued to grow for the 32nd consecutive month, at a rate of 1.5% on an annual basis.
In the bond market, eurozone bond yields resumed their poor performance today, but a similar decline in US Treasury yields appears to have prevented further pressure on the Euro. The yield on ten-year German bonds reached the level of 2.160% at the maximum declines today, while the corresponding US Treasury bonds reached 3.979%, which is slightly close to its lowest levels this week.
While attention turns to the inflation numbers in the United States for December, which we will see tomorrow. While inflation is expected to rise slightly last December to 3.2% on an annual basis, which may put some pressure on the euro in turn.
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2028.80 | – 6.60 | – 0.32% |
| Silver (oz) | 23.08 | – 0.09 | – 0.39% |
| Copper (lb) | 3.79 | + 0.03 | 0.80% |
| Aluminium (lb) | 1.01 | – 0.01 | – 0.49% |
| Nickel (lb) | 7.23 | 0.00 | 0.00% |
| Zinc (lb) | 1.13 | – 0.00 | – 0.24% |
| West Texas Crude | 71.32 | – 0.75 | – 1.04% |
| Brent Crude | 76.74 | – 0.68 | – 0.88% |
| Iron Ore (t) | 132.30 | – 5.10 | – 3.71% |
The Australian share market over the past thirty days…
| Index | 10 Jan 2024 | Week To Date | Month To Date (Jan) | Quarter To Date (Jan-Mar) | Year To Date (2024) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 7468.50 | -0.28% | -1.61% | -1.61% | -1.61% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ASX | ASX | Downgrade to Neutral from Outperform | Macquarie |
| CEH | Coast Entertainment | Upgrade to Accumulate from Hold | Ord Minnett |
| CGF | Challenger | Downgrade to Hold from Accumulate | Ord Minnett |
| CSR | CSR | Downgrade to Sell from Hold | Ord Minnett |
| IAG | Insurance Australia Group | Downgrade to Hold from Add | Morgans |
| JBH | JB Hi-Fi | Upgrade to Neutral from Underperform | Macquarie |
| JDO | Judo Capital | Downgrade to Hold from Accumulate | Ord Minnett |
| MFG | Magellan Financial | Downgrade to Sell from Neutral | Citi |
| MTO | Motorcycle Holdings | Downgrade to Hold from Add | Morgans |
| NXT | NextDC | Downgrade to Lighten from Hold | Ord Minnett |
| PBP | Probiotec | Downgrade to Hold from Add | Morgans |
| SGM | Sims | Downgrade to Sell from Neutral | Citi |
| TLC | Lottery Corp | Upgrade to Accumulate from Hold | Ord Minnett |
For more detail go to FNArena's Australian Broker Call Report, which is updated each morning, Mon-Fri.
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