24 Nov 2023
Equity markets mixed on lower trading volumes
Markets
- Local and global equity markets were mixed this week on weaker trading volumes given US holidays.
- Third quarter results reported by the largest 500 US companies showed more than 80% beat analyst expectations, the highest rate since the second quarter of 2021.
- In local stock news, footwear retailer Accent Group shares fell after their chairman stated sales were down 2% for the first 19 weeks of the financial year. The chairman was upbeat though, saying the company was well positioned heading into its three most important trading months of the year.
- The Australian Stock Exchange shares rose after the company announced it had hired global technology provider TATA Consultancy Services to deliver a replacement for its very old CHESS settlement system for trades.
- Healius shares fell sharply to an all-time low for the company after the pathology chain raised $154 million at a deep discount. Pathology companies have been plagued by staff shortages and higher costs.
- Origin shares fell after the company postponed a meeting where shareholders were set to vote on its acquisition by a private equity consortium. The consortium has since upped their offer again, which was quickly rejected by key shareholder Australian Super with another meeting to be held on December 4.
- Oil prices fell after OPEC+ delayed a meeting planned for this weekend, dashing expectations the cartel would again tighten supplies.
Economics
- The RBA November board minutes showed the case for the November rate hike was to mitigate the risks of a slower return of inflation to target, with more resilient demand playing a role in stronger growth and inflation.
- The new RBA Governor told a gathering of economists the inflation challenge in Australia is now homegrown and demand driven, having moved on from the global drivers a year or so ago. She also made clear the right response to demand-driven inflation is tighter conditions (higher rates).
- The US Federal Reserve minutes reiterated the bank’s strategy to proceed carefully on future hikes while not ruling them out if inflation data warranted a move. The current restrictive policy to remain until the bank sees more evidence inflation continues to trend down to target.
- The US Conference Board leading index, a key forward looking indicator for the US economy, fell by 0.8% in October, coming in below already weak expectations.
- Americans are increasingly tapping their retirement savings to cover housing and medical bills in light of higher cost of living pressures, according to recently released data. 2.3% of workers took a hardship withdrawal last quarter.
- In other US news, existing home sales fell by 4.1% in October, the lowest since 2010; durable goods orders dropped 5.4% in October, coming in well below expectations; and a key consumer sentiment index slid to lower levels but came in marginally above expectations.
- A key Eurozone economic indicator ticked up in October from a 3-year low but remained firmly in contractionary territory.
- Annual German producer prices fell by 11% in October, in line with expectations, after dropping 14.7% in September.
- Japanese core consumer inflation grew slightly below expectations in October as food prices eased. The reading remained well above target, accelerating from last month’s level.
- The Reserve Bank of India issued new regulatory measures that raise the risk weights on consumer credit exposure of commercial banks and non-banking financial companies, which may force banks to hold more capital or issue less credit.
Politics
- Australian officials have rebuked China following injuries incurred by Australian navy divers from a Chinese destroyer inside Japan’s exclusive economic zone. According to reports, the Chinese vessel ignored requests to keep clear of the divers.
- The Chinese government made a list of 50 developers eligible for financing support as authorities pivot to help distressed builders.
- Argentine voters elected libertarian outsider Javier Milei as their new President, sending ripples across the global political spectrum given his firebrand approach and his campaign pledges which are in stark contrast to most on the current political spectrum. The populace trying something different.
- Dutch populist leader Geert Wilders will start looking for coalition partners after a shock election win with Wilders vowing to halt immigration, slash payments to the EU and block the entrance of new members.
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