The Monday Report – 28 October 2024

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SPI futures are indicating a rather lacklustre start to the final week for October in Australia with traders and investors preparing for an eventful week ahead.

By Chris Weston, Head of Research, Pepperstone

Good morning.

As the US election noise ramps up, traders also face the challenge of navigating a messy US nonfarm payrolls report, a massive week of US corporate earnings, US PCE inflation and EU, Swiss and Aus CPI prints.

Month-end rebalancing flows could impact price action as investment funds look to rebalance portfolios.

While much ink has already been spilt outlining the measures likely to be heard from Wednesday’s UK budget, the prospect of a fiscally tight budget looms large.

It seems whether we’re looking at political developments, tier 1 economic data or influential company earnings, there are landmines all over the shop for traders to navigate their positions over.

Remaining vigilant, dynamic, and open-minded to changes in price action will subsequently serve any trader well this week.

The Risk Manager Drilling down into the key event risks

The US election is now just 8 days away and while it may be an event many want out of the way, if anything the noise will only increase through the week, as will its impact on the trading environment.

Trump remains well ahead in the betting markets, and ahead but within the margin of error – in all 7 swing states (source: RealClear Politics) and this position has been consistent for long enough to make many think it is a real possibility.

After another strong week for the USD, many attempt to quantify the degree to which potential Trump tariff risk is priced into USD, as they do for equity indices, gold, and Treasuries.

US data come in heavy this week, with the Fed’s preferred inflation gauge (core PCE) and the US labour market in full view JOLTS job openings, ADP, employment cost index, weekly claims, and nonfarm payrolls all under the spotlight.

The big week for US company earnings

US Q3 earnings have thrown up some big moves in individual names and notably in Tesla (+22% w/w) and Newmont Mining (-16% w/w).

It’s been a reasonable reporting period thus far, with 36% of S&P500 companies having reported quarterly earnings and 77% of these names having beating consensus EPS expectations by an average of 6%.

50% of these names have beaten expectations on the sales line, which is in line with the historical average.

This coming week though, over 40% of the S&P500 market cap is due to report, with earnings likely to rival the US election news flow and the US data flow as a driver of sentiment.

Traders will be drawn to numbers from Alphabet, Meta, Microsoft, Apple, and Amazon, although AMD, Snap, Caterpillar, McDonalds, and Visa could kick onto the radar too.

Meta is one of the most crowded longs in the equity space, so there is a high bar to please the market and with an implied move of -/+7.1% on the day of reporting, this could be one to put on the radar.

At an index level, the S&P500 closed the week -1%, and we see sideways chop and consolidation on the daily chart suggesting longs would want to see S&P500 futures hold above 5830, or we could see some of the weaker hands look to take some off the table.

The Russell 2k (-3% over the past 5 days) and Dow (-2.7%) with the latter dragged lower by 3M, McDonald’s, and IBM. Let’s see how traders work this through the week.

On the calendar today:

-New Zealand Public Holiday

-US Oct Dallas Fed manufacturing

-ASX ((ASX)) AGM

-Bellevue Gold ((BGL)) Qtrly Update

-IGO Ltd ((IGO)) Qtrly update

-Karoon Energy ((KAR)) Investor Day 27-30 Oct

-Lynas Rare Earths ((LYC)) Qrtly report

-Paladin Energy ((PDN)) Qtrly report

-Polynovo ((PNV)) AGM

-SiteMinder ((SDR)) AGM

-Temple & Webster ((TPW)) AGM

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

Corporate news in Australia:

-ANZ Bank ((ANXZ)) has flagged a -$196m one-off accounting charge to its second half statutory profit due to its Suncorp bank buy. It will be equivalent to -2bps reduction to ANZ’s level 2 common equity tier 1 capital

-Platinum Asset Management’s ((PTM)) board is evaluating competing bids, including an improved offer from Regal Partners ((RPL))

-Federation Mining, backed by AustralianSuper, has bid for Siren Gold ((SNG))

-Star Entertainment’s ((SGR)) lenders may extend its December deadline to raise $150m to ensure continued operations.

-RBA Governor Michele Bullock is considering individual board votes and mandating speeches for members to boost transparency, even if Chalmers’ overhaul fails to pass parliament

The Australian share market over the past thirty days

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

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