8 Nov 2024
Investors buoyed by US election result
Markets
- Local and global markets surged this week after Donald Trump was declared the winner in the 2024 US election.
- In local stock news, Woolworths shares fell after the company downgraded its first half earnings guidance by 5.6% compared to the same time last year and 10.4% below consensus expectations of $1.68 billion.
- Mineral Resources shares fell as the board took action to move founder and managing director Chris Ellison out of the role in the next eighteen months. He was also fined $8.8 million and will lose remuneration of up to $9.6 million to reflect damage caused to the company.
- Westpac shares rose after posting a $7 billion full-year profit that was roughly in line with expectations despite being 3% lower on the previous year.
- Domino’s Pizza CEO Don Meij will retire with Mark van Dyck appointed as his replacement. The trading update also noted same store sales down 1.2% in Australia whilst offshore sales remain negative.
Economics
- The RBA kept its cash rate unchanged at 4.35% during its November meeting, as expected. There was little of note in the statement accompanying the decision.
- A key Australian industrial activity index dropped sharply in October marking thirty consecutive months of contraction. All key indicators of activity declined, with employment continuing its downward trend.
- The US central bank lowered the federal funds target rate by 0.25% to 4.50-4.75% at its November 2024 meeting, following the large 0.50% cut in September. The November cut was in line with expectations.
- The US economy added 12,000 jobs in October, well below the downwardly revised 223,000 in September and forecasts of 113,000. It was the lowest job growth since December 2020, and revisions to employment for August and September showed 112,000 fewer jobs than previously reported.
- Private US payrolls data in the US decreased by 28,000 in October, the first decline since December 2020, compared to a downwardly revised 192,000 in September and forecasts of 90,000.
- A key US manufacturing data point was revised higher in October after hitting a fifteen-month low in September. The reading remained contractionary. In contrast, the services component of the data jumped in October to the highest reading since August 2022.
- Euro area inflation reaccelerated to 2% in October 2024 after touching 1.7% in September, which was the lowest since April 2021, and above forecasts of 1.9%. Prices for food, alcohol and tobacco rose whilst energy costs fell at a slower pace.
- Retail sales in the Euro area increased 0.5% in September over the previous month.
- Eurozone manufacturing data continued to signal ongoing contraction in the region though at a slower rate of decline. The data was the same for Germany.
- The Bank of England lowered its bank rate by 0.25% to 4.75% in its November 2024 decision, as expected, marking the second rate cut in four years following the start of the rate cutting cycle in August. Eight of the nine members voted for a cut, with one opting for a hold.
- The Bank of Japan maintained its key short-term interest rate at 0.25% during its October meeting, keeping it at the highest level since 2008 and matching market expectations.
- The Bank of Japan also updated both their inflation and economic growth expectations, retaining both forecasts for this financial year and the next two.
- China manufacturing data increased in October, coming in slightly above market expectations, and marking the first expansion in factory activity since April.
- Exports from China surged by 12.7% in October to a twenty-seven-month high, coming in significantly ahead of expectations and up from a five-month low of 2.4% in September. Manufacturers may be front-loading orders in anticipation of further tariffs.
Politics
- Donald Trump defeated Kamala Harris to win the US presidency for a second time. Whilst all votes are yet to be counted, it looks likely Trump will govern with a strong mandate given a clean sweep for the Republicans in Congress and the Senate, with Trump also winning the popular vote.
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