The Overnight Report: Inflation Stirs Debate

Daily Market Reports | Nov 28 2024

This story features FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED, and other companies. For more info SHARE ANALYSIS: FPH

World Overnight
SPI Overnight 8459.00 + 21.00 0.25%
S&P ASX 200 8406.70 + 47.30 0.57%
S&P500 5998.74 – 22.89 – 0.38%
Nasdaq Comp 19060.48 – 115.10 – 0.60%
DJIA 44722.06 – 138.25 – 0.31%
S&P500 VIX 14.18 + 0.08 0.57%
US 10-year yield 4.24 – 0.06 – 1.39%
USD Index 106.03 – 0.89 – 0.83%
FTSE100 8274.75 + 16.14 0.20%
DAX30 19261.75 – 34.23 – 0.18%

Good morning.

It is the Thanksgiving public holiday in the US with the bond market and equity markets closed.

Both markets will also close early on Friday (circa 1pm). It is also the Black Friday shopping period.

Inflation is back on financial markets’ radar and overnight the latest moves originated from Europe where ECB Board member Isabel Schnabel stated in a Bloomberg interview there’s only room left for limited rates cuts.

“Given the inflation outlook”.

The European deposit rate currently stands at 3.25%. Schnabel estimates the neutral rate is somewhere between 2-3%.

Traders in government bonds started paring back the outlook for further ECB rate cuts, which pushed the euro higher against the USD.

US Treasury yields are lower across the curve, also taking into account a slew of economic data, with market pricing implying the odds for a Fed rate cut next month have improved to 70% from 63%.

Bond market moves had a negative impact on equities, with technology retreating most in the US.

The Dow (-0.3%) and S&P500 (-0.38%) outperformed the Nasdaq (-0.6%).

Probably the most influential data release overnight was the US headline PCE deflator which rose 0.2% m/m while the core PCE deflator was up 0.3% m/m, both in line with expectations.

The supercore PCE deflator was up 0.36% m/m, the highest since March. On an annual basis, supercore firmed up to 3.5% y/y (vs 3.2% before). Importantly, the 3mth annualised rose to 3.5%.

The slow progress on disinflation in addition to the policy uncertainty surrounding the incoming administration have opened up a debate on Wall Street whether the Fed will turn more cautious in its easing cycle.

Australia had its own inflation update yesterday and economists believe without the electricity rebate local price inflation is going nowhere for the time being, seemingly staying glued to 3.5%, which is higher than the RBA likes it to be.

The softening USD had a positive impact on base metals and iron ore, while oil prices merely stabilised and gold managed a small gain.

SPI futures on Thursday morning are suggesting a moderately positive opening.

On the calendar today:

-New Zealand ANZ business confidence Nov

-Australia 3Q PCE

-US Nov jobless claims

-US Public Holiday

-Fisher & Paykel ((FPH)) earnings report

-Hub24 ((HUB)) Strategy Day

-Red Hill Minerals ((RHI)) ex-div 30c (100%)

-Star Entertainment ((SGR)) AGM

-Strike Energy ((STX)) AGM

-TechnologyOne ((TNE)) ex-div 17.37c (65%)

-Tower ((TWR)) FY24 earnings report

-Westgold Resources ((WGX)) AGM

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

Corporate news in Australia:

-Fonterra ((FSF)) seeks court clarification on its licensing agreement with Bega Cheese ((BGA)) to facilitate the sale of its assets

-Seven ((SWM)), ABC, SBS and ACM join forces to demand AI firms like OpenAI and Google pay for using their content to train large language models, filing with the ACCC for collective bargaining approval.

-Macquarie Bank’s ((MQG)) London branch (MBL) was fined GBP13m for trader’s fraudulent activity

Spot Metals,Minerals & Energy Futures
Gold (oz) 2662.22 + 4.56 0.17%
Silver (oz) 30.58 – 0.40 – 1.29%
Copper (lb) 4.14 + 0.01 0.35%
Aluminium (lb) 1.17 – 0.00 – 0.27%
Nickel (lb) 7.17 – 0.04 – 0.50%
Zinc (lb) 1.41 + 0.03 2.21%
West Texas Crude 68.77 + 0.11 0.16%
Brent Crude 72.38 + 0.21 0.29%
Iron Ore (t) 102.06 0.00 0.00%

The Australian share market over the past thirty days

Index 27 Nov 2024 Week To Date Month To Date (Nov) Quarter To Date (Oct-Dec) Year To Date (2024)
S&P ASX 200 (ex-div) 8406.70 0.15% 3.02% 1.66% 10.75%
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
GQG GQG Partners Downgrade to Hold from Add Morgans
IAG Insurance Australia Group Downgrade to Accumulate from Buy Ord Minnett
LOV Lovisa Holdings Upgrade to Hold from Lighten Ord Minnett
MP1 Megaport Downgrade to Hold from Accumulate Ord Minnett
QAN Qantas Airways Downgrade to Neutral from Buy UBS
RSG Resolute Mining Downgrade to Hold from Accumulate Ord Minnett
WTC WiseTech Global Upgrade to Outperform from Neutral Macquarie
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)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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CHARTS

BGA FPH FSF HUB MQG RHI SGR STX SWM TNE TWR WGX

For more info SHARE ANALYSIS: BGA - BEGA CHEESE LIMITED

For more info SHARE ANALYSIS: FSF - FONTERRA SHAREHOLDERS FUND

For more info SHARE ANALYSIS: HUB - HUB24 LIMITED

For more info SHARE ANALYSIS: MQG - MACQUARIE GROUP LIMITED

For more info SHARE ANALYSIS: RHI - RED HILL MINERALS LIMITED

For more info SHARE ANALYSIS: SGR - STAR ENTERTAINMENT GROUP LIMITED

For more info SHARE ANALYSIS: STX - STRIKE ENERGY LIMITED

For more info SHARE ANALYSIS: SWM - SEVEN WEST MEDIA LIMITED

For more info SHARE ANALYSIS: TNE - TECHNOLOGY ONE LIMITED

For more info SHARE ANALYSIS: TWR - TOWER LIMITED

For more info SHARE ANALYSIS: WGX - WESTGOLD RESOURCES LIMITED