The Overnight Report: US Down, ASX Up

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The US bond market is preparing for higher inflation and last night Fed Chair Jerome Powell added more fuel to the fire.

There’s also a growing sense the rally in US equities looks fatigued. A pause, at the very least, seems but appropriate.

US equities closed lower overnight, though the yield on the US 10y bond retreated -5bp to 4.41%.

Locally, SPI futures are indicating the Aussie share market wants to finish this week on a positive note.

Good morning.

US equities and Treasuries had an up, down, up, down session overnight with inflation concerns and prospective rate cuts taking centre stage.

Given sticky inflation and a robust looking US economy, Fed chair Powell suggested a slower pace of rate cuts might be the best way forward.

Economic indicators backed up Powell’s sentiment with initial jobless claims decreasing by -4k to 217k in the week ended Nov. 9.

The update marked the lowest level since May and running slightly below the average of the past 2-3 years.

Economists labelled it an impressive outcome bearing concerns of an uptick in claims from hurricanes and the Boeing strike.

PPI data proved slightly stronger than expected in October, with headline and core measures picking up.

Meanwhile, over in Europe, sentiment has a different colour with investors increasing bets on bigger and faster ECB rate cuts amid concerns over the economic growth outlook following Trump’s re-election and signs of lower inflation ahead.

The Euro Stoxx 50 gained 2.0% and the FTSE 100 closed up 0.5%.

Commodities didn’t have a good day. Iron ore prices led the decline, down -2.2% and yet again trading sub-US$100/tonne.

ANZ Bank reports concerns over China’s growth outlook and underwhelming stimulus have been weighing on the bulk commodity.

Oil prices are down showing only a small reaction to the lates IEA report noting global oil markets face a surplus of more than 1m/b a day next year as Chinese demand continues to falter.

The IEA warned the global glut would be even bigger if OPEC-plus decides to press on with plans to revive halted production when it gathers next month, according to the agency.

 Oil prices fell, with WTI futures down -0.4% to USD68.1/bbl. Gold was up 0.9% at USD2,569/oz

On the calendar today:

-New Zealand Oct Manufacturing PMI

-Japan 3Q GDP

-China Oct new yuan loans

-China Oct retail sales

-China Oct Unemployment rate

-US Jobless claims

-US Oct PPI

-US Oct retail sales

-Auckland Airport ((AIA)) Qtrly update

-Bannerman Energy ((BMN)) AGM

-Deep Yellow ((DYL)) AGM

-Healius ((HLS)) AGM

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

Corporate news in Australia:

-The scandal at Mineral Resources ((MIN)) continues with the company’s  $45m purchase of a Perth industrial site uncovering undisclosed ties to its founder Chris Ellison, who personally benefited from the deal alongside associates

-GrainCorp ((GNC)) is actively seeking acquisitions

-AxiCorp has outbid Bell Financial Group ((BFG)) with a $53m offer for Selfwealth ((SWF)), sparking a potential bidding war

-Seek ((SEK)) has agreed to acquire Xref ((XF1)) for $41.2m

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.

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