Daily Market Reports | 8:16 AM
This story features PRO MEDICUS LIMITED, and other companies. For more info SHARE ANALYSIS: PME
SPI futures are indicating a positive start to the new week for the local bourse.
On Friday, the S&P 500 ended up 0.3% and the Dow up 1.0%, continuing strength from the European session, where the Euro Stoxx 50 closed up 0.7% and the FTSE 100 surged 1.4%.
The Nasdaq only gained 0.16% on the day.
Bonds rallied slightly, with the yield on the US 10y bond down -2bp to 4.40%. Yields were also lower in Europe.
Oil prices were higher, with WTI futures up 1.6% to USD71.2/bbl. Gold rose 1.7% to USD2,716.2/oz.
| World Overnight | |||
| SPI Overnight | 8461.00 | + 38.00 | 0.45% |
| S&P ASX 200 | 8393.80 | + 70.80 | 0.85% |
| S&P500 | 5969.34 | + 20.63 | 0.35% |
| Nasdaq Comp | 19003.65 | + 31.23 | 0.16% |
| DJIA | 44296.51 | + 426.16 | 0.97% |
| S&P500 VIX | 15.24 | – 1.63 | – 9.66% |
| US 10-year yield | 4.41 | – 0.02 | – 0.50% |
| USD Index | 107.51 | + 0.54 | 0.51% |
| FTSE100 | 8262.08 | + 112.81 | 1.38% |
| DAX30 | 19322.59 | + 176.42 | 0.92% |
By Chris Weston, Head of Research, Pepperstone
Good morning.
As we look to see any distortions from month-end rebalancing flows, the reaction from any further geopolitical headlines and potential repositioning after some big price trends in markets, the main known event risks for the week ahead will be US (Nov) consumer confidence, US core PCE inflation, and CPI inflation reads from Europe, Japan and Australia.
The RBNZ meeting should deliver a -50bp cut, while China PMIs are released on Saturday.
The US Thanksgiving holiday will see US equity and bond markets close on Thursday, followed by partial trade on Friday. With reduced participation, market players may look to pack orders before the extended break.
From a top-down big, picture perspective, we consider the key themes driving sentiment, cross-asset flows and price action – where we review:
-Continued focus on trading Trump 2.0 News that Scott Bessent has been confirmed as the incoming US Treasury Secretary should be taken positively by US markets, but the appointment won’t come as a surprise.
-Euro area economic fragility we assess the probability that the ECB step up to -50bp cut increments. Many also question how far the ECB can take down interest rates and the probability of EURUSD reaching parity in Q125.
-We’re seeing Increasing expectations of diverging G10 central bank policy settings that offers increasing opportunity but also higher implied FX volatility.
-Selectively long USDs – The USD remains fundamentally attractive, but positioning for further USD upside should now be considered on a selective basis.
-An unwelcomed increase in the geopolitical news flow Many consider this a reason why gold rallied 6% last week, although there is little evidence of de-risking in other markets.
-With measures of implied US equity and bond volatility falling, we ask whether lower volatility increases the potential for a risk-on rally into year-end.
Europe in the doghouse
Whether we review the relative performance of EU equity indices or the EUR currency, there is a broad migration away from EU risk, with EU govt bonds outperforming.
Expectations are for November headline EU CPI to come in at -0.2% m/m / 2.3% y/y, with core CPI eyed at 2.8% y/y (from 2.7%).
US data in view – can the USD kick further higher?
In the US the highlights from the economic data flow will be the November consumer confidence (Tuesday), FOMC meeting minutes (Tuesday) and core PCE inflation (Wednesday).
The US consumer confidence report was compiled after the US election, so most economists expect a rise in consumer confidence. and therefore, it’s the extent of improvement that matters the market expects the index to lift from 108.7 to 111.8.
US Core PCE inflation is expected to lift 0.3% m/m taking the year-on-year clip to 2.3% (from 2.1%).
Equity bulls will want to see a healthy bounce in the consumer data, married with a below consensus read on PCE inflation.
Equity shorts and the USD longs would want to see a hotter PCE print.
The USD index (DXY) has rallied for 8 consecutive weeks (one of these was unchanged) A 9th weekly gain seems a tall order given how rich positioning has become, but there is no doubt the trend higher in the USD is justified.
Aussie CPI could be a tailwind for the AUD
In Australia, the October monthly CPI is released on Wednesday.
The median call is for headline CPI to increase 20bp to 2.3% y/y, which would certainly justify current swaps pricing, which prices the first -25bp cut from the RBA by May 2025.
The RBNZ fully expected to cut by -50bp
On Wednesday, the RBNZ should almost certainly cut rates by -50bp but that is now firmly priced.
Elsewhere the US Treasury will auction over US$200bn in Treasuries across the 2yr, 5yr and 7yr maturities, where the level of the demand could result in increased movement in US Treasury yields.
Naturally, the direction of travel in the US Treasury complex could spill over into the USD, US equity and gold.
Gold has found a run of form, closing the week on session highs, and putting on its 2nd best week of the year pullbacks should be well supported.
On the calendar today:
-New Zealand Retail sales
-US Dallas Fed manufacturing
-Pro Medicus ((PME)) AGM
-Select Harvests ((SHV)) earnings report
-Smartpay Holdings ((SMP)) releases earnings
-Southern Cross Media Group ((SXL)) AGM
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
Corporate news in Australia:
-Evolution Mining ((EVN)) is considering selling its Mungari gold mine, a move that could fetch between $600m and $1bn
-Pacific Equity Partners is in advanced talks to acquire Australian fleet management company SG Fleet ((SGF)) in a deal valued at over $1bn
-Air New Zealand ((AIR)) expects earnings before tax for the first half of FY25 in the range of $NZ120m to $NZ160m as it warned of ongoing aircraft shortage due to maintenance delays
-Synlait Milk ((SM1)) has increased its forecast base milk price for the 2024/2025 season to $NZ9.50 per kg milk solid (kgMS), up from $NZ9.00 due to stronger global commodities prices
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2737.20 | + 63.30 | 2.37% |
| Silver (oz) | 31.78 | + 0.91 | 2.94% |
| Copper (lb) | 4.13 | + 0.02 | 0.52% |
| Aluminium (lb) | 1.19 | + 0.00 | 0.04% |
| Nickel (lb) | 7.14 | + 0.07 | 0.95% |
| Zinc (lb) | 1.34 | – 0.01 | – 0.97% |
| West Texas Crude | 70.70 | + 0.47 | 0.67% |
| Brent Crude | 74.63 | + 0.25 | 0.34% |
| Iron Ore (t) | 101.95 | – 0.07 | – 0.07% |
The Australian share market over the past thirty days
| Index | 22 Nov 2024 | Week To Date | Month To Date (Nov) | Quarter To Date (Oct-Dec) | Year To Date (2024) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8393.80 | 1.31% | 2.87% | 1.50% | 10.58% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ADH | Adairs | Upgrade to Buy from Hold | Bell Potter |
| AMC | Amcor | Upgrade to Hold from Lighten | Ord Minnett |
| CLG | Close the Loop | Downgrade to Hold High Risk from Buy High isk | Shaw and Partners |
| HLS | Healius | Upgrade to Neutral from Sell | Citi |
| MIN | Mineral Resources | Upgrade to Neutral from Sell | Citi |
| PGC | Paragon Care | Upgrade to Buy from Accumulate | Ord Minnett |
| Downgrade to Hold from Buy | Bell Potter | ||
| PLL | Piedmont Lithium | Upgrade to Neutral from Underperform | Macquarie |
| PWH | PWR Holdings | Upgrade to Buy from Hold | Bell Potter |
| Upgrade to Buy from Neutral | Citi | ||
| STO | Santos | Upgrade to Buy from Neutral | Citi |
| Upgrade to Add from Hold | Morgans | ||
| SYA | Sayona Mining | Upgrade to Neutral from Underperform | Macquarie |
| TEA | Tasmea | Downgrade to Hold from Buy | Shaw and Partners |
| TNE | TechnologyOne | Downgrade to Neutral from Outperform | Macquarie |
| Downgrade to Hold from Add | Morgans | ||
| Downgrade to Lighten from Hold | Ord Minnett | ||
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.)
(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author’s and not by association FNArena’s – see disclaimer on the website)
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CHARTS
For more info SHARE ANALYSIS: EVN - EVOLUTION MINING LIMITED
For more info SHARE ANALYSIS: PME - PRO MEDICUS LIMITED
For more info SHARE ANALYSIS: SGF - SG FLEET GROUP LIMITED
For more info SHARE ANALYSIS: SHV - SELECT HARVESTS LIMITED
For more info SHARE ANALYSIS: SM1 - SYNLAIT MILK LIMITED
For more info SHARE ANALYSIS: SMP - SMARTPAY HOLDINGS LIMITED
For more info SHARE ANALYSIS: SXL - SOUTHERN CROSS MEDIA GROUP LIMITED