Daily Market Reports | 8:57 AM
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Donald Trump’s pick of hedge fund manager Scott Bessent for Treasury secretary and a potential ceasefire agreement between Israel and Hezbollah dominated financial markets overnight.
SPI futures are suggesting a gain of 0.50% at the open with energy and gold out of favour.
| World Overnight | |||
| SPI Overnight | 8464.00 | + 41.00 | 0.49% |
| S&P ASX 200 | 8417.60 | + 23.80 | 0.28% |
| S&P500 | 5987.37 | + 18.03 | 0.30% |
| Nasdaq Comp | 19054.84 | + 51.19 | 0.27% |
| DJIA | 44736.57 | + 440.06 | 0.99% |
| S&P500 VIX | 14.60 | – 0.64 | – 4.20% |
| US 10-year yield | 4.27 | – 0.15 | – 3.29% |
| USD Index | 106.84 | – 0.67 | – 0.63% |
| FTSE100 | 8291.68 | + 29.60 | 0.36% |
| DAX30 | 19405.20 | + 82.61 | 0.43% |
By Chris Weston, Head of Research, Pepperstone
Good morning.
It’s been a day where correlations and typical cross-asset relationships have broken down, with the varied news flow resulting in outsized movement in targeted markets.
For the macro trader, the breakdowns have been a more of a challenge, although the moves in markets can be easily explained by the news flow, with headlines from the Middle East and the reaction to Scott Bessent being appointed as US Treasury Secretary driving the flows while month-end dynamics and broad repositioning have also been a factor.
US Treasuries find solid buying interest, with yields down -11bp-13bp across the curve.
Scott Bessent’s appointment as US Treasury Secretary clearly enthused the bond market, who view him as a fiscal hawk, and adopting a more prudent approach to federal spending.
Bessent is also considered as wanting a more gradualistic approach to tariffs, and while that call will be placed with the trade representative team, the bond market likes the idea of having Bessent in this role and sees him as a safe pair of hands.
Interest rates/swaps traders have also increased the probability of a -25bp cut at the 18 December FOMC meeting to 53% – adding 5bp of implied cuts for the meeting on the day.
In a session where gold and crude have seen steep falls on positive geopolitical headlines, with the VIX index now holding a 14-handle and US small caps hitting a new all-time high, increasing rate cut expectations may be hard to reconcile, but relationships break down.
Our gold flows have been well above average, which won’t surprise, given that gold has seen its second-biggest decline in 2024.
We can see that the gold move had a strong relationship with Brent crude, so while the initial selling through Asia was more about offloading profitable longs after a 6% gain last week, the selling certainly accelerated as the constructive headlines of an Israel-Hezbollah ceasefire were known to the collective.
On the day we saw a low energy tape in the S&P500 & NAS100, with the S&P500 essentially moving sideways in a tight range for most of trade, with tech and the MAG7 names finding limited buying interest.
REITS and consumer plays have worked well, and we see a more convincing move in the Dow and Russell 2k, with the small cap index setting a new all-time high before retreating.
Aggerating the leads, we see the ASX200 eyeing a 0.5% gain on open.
With energy names likely finding sellers on open, and banks finding some upside potential, we can look for materials plays to outperform.
On the calendar today:
-Japan PPI
-US FOMC minutes
-US New home sales
-Brickworks ((BKW)) AGM
-Gentrack Group ((GTK)) earnings report
-Newmont Corp ((NEM)) ex-div 26.21c
-Pilbara Minerals ((PLS)) AGM
-Regis Resources ((REG)) AGM
-Ramsay Health Care ((RHC)) AGM
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
Corporate news in Australia:
-Battery technology company Novonix ((NVX)) signed binding supply deal with Volkswagen’s PowerCo for 32,000 tonnes of synthetic graphite starting 2027
-MinRes’ Chris Ellison quits as Chairman of Delta Lithium ((DLI))
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2651.95 | – 85.25 | – 3.11% |
| Silver (oz) | 30.82 | – 0.96 | – 3.02% |
| Copper (lb) | 4.17 | + 0.03 | 0.84% |
| Aluminium (lb) | 1.19 | + 0.01 | 0.64% |
| Nickel (lb) | 7.29 | + 0.15 | 2.11% |
| Zinc (lb) | 1.36 | + 0.02 | 1.45% |
| West Texas Crude | 69.08 | – 1.62 | – 2.29% |
| Brent Crude | 72.61 | – 2.02 | – 2.71% |
| Iron Ore (t) | 101.95 | 0.00 | 0.00% |
The Australian share market over the past thirty days
| Index | 25 Nov 2024 | Week To Date | Month To Date (Nov) | Quarter To Date (Oct-Dec) | Year To Date (2024) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8417.60 | 0.28% | 3.16% | 1.79% | 10.89% |
| 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 |
| GQG | GQG Partners | Downgrade to Hold from Add | Morgans |
| LOV | Lovisa Holdings | Upgrade to Hold from Lighten | Ord Minnett |
| MIN | Mineral Resources | Upgrade to Neutral from Sell | Citi |
| MP1 | Megaport | Downgrade to Hold from Accumulate | Ord Minnett |
| 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 | ||
| RSG | Resolute Mining | Downgrade to Hold from Accumulate | Ord Minnett |
| STO | Santos | 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 |
| WTC | WiseTech Global | Upgrade to Add from Hold | Morgans |
| 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.
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: BKW - BRICKWORKS LIMITED
For more info SHARE ANALYSIS: DLI - DELTA LITHIUM LIMITED
For more info SHARE ANALYSIS: GTK - GENTRACK GROUP LIMITED
For more info SHARE ANALYSIS: NEM - NEWMONT CORPORATION REGISTERED
For more info SHARE ANALYSIS: NVX - NOVONIX LIMITED
For more info SHARE ANALYSIS: PLS - PILBARA MINERALS LIMITED
For more info SHARE ANALYSIS: REG - REGIS HEALTHCARE LIMITED
For more info SHARE ANALYSIS: RHC - RAMSAY HEALTH CARE LIMITED