Wall St may have rebounded overnight, but the ASX is set to start lower with ASX futures down 26 points or 0.3% to 7,331 near 4.27am AEDT.
Here’s what we saw:
- The Aussie dollar rose from lows near US73.80 cents to highs near US74.20 cents and was near the highs at the US close.
- Global oil prices were mixed on Monday. Reuters reported, There are several things going on here. "Oil output from the Permian basin of Texas and New Mexico was expected to rise 62,000 barrels per day (bpd) to 4.8 million bpd next month, the Energy Information Administration said in its drilling productivity report." Commsec reported, “Weaker US production data weighed on sentiment. But there were more reports of energy producers switching from coal and gas to oil products for power generation.”
- The Brent crude price fell by US53 cents or 0.6% to US$84.33 a barrel. The US Nymex crude price rose by US16 cents or 0.2% to 7-year highs near US$82.44 a barrel.
- Base metal prices were mixed on Monday. Copper, lead and tin rose, with copper up 7.2%.
- Other metals fell by as much as 3.1% with zinc down the most.
- The gold futures price fell by US$2.60 or 0.1% to U$1,765.70 an ounce.
- Spot gold was trading near US$1,764 an ounce at the US.
Australian market
The RBA will release its minutes today, with little effect on the market.
The role of Central Banks has come into question a lot lately.
The US Federal Reserve is now said to be in unfamiliar territory.
At the Institute Global Conference which opened on October 17 at the Beverly Hills Hilton, Guggenheim Partners chief investment officer Scott Minerd said markets were becoming addicted to central bank stimulus.
That’s not necessarily a good thing. The Central Bank is now influencing factors including gender inequality and income.
“For the time being we’re just addicted to this,” Minerd said. “Central banks are functioning in a role that they were never designed to do and are now running the markets.”
What happens though, if the Fed miscalculates.
“That’s where we could end up with recessionary risks down the line,” MKM Holdings chief economist and market strategist Michael Darda said. “That’s not going to be a risk for next year in my estimation, but this could prove to be a shorter business cycle.”
Back home and the RBA is seen to be doing what it needs to be doing with no sign of an interest rate hike … just yet.
According to TD Economics senior Asia-Pacific rates strategist Prashant Newnaha, “The market is likely to test RBA’s commitment to defend the Apr′24 10bps yield target. The next scheduled purchase date is Thursday, but we don’t anticipate the RBA to step in then or before the RBA’s November meeting. This implies higher front-end yields.
“We expect the RBA to announce the Apr′23s as the new target bond at next month’s board meeting. This is earlier than we had anticipated, but it remains consistent with our current RBA call for the bank to begin hiking in May′23.”
Meanwhile in Victoria
Victoria’s redeveloped roadmap out of lockdown should have enormous benefits for the Australian economy, particularly as we head into the festive season.
Treasurer Josh Frydenberg and the Treasury estimated the national economy will have shrunk at least 3% in the September quarter.
The Victorian-NSW lockdowns contributing to much of the downturn as they represent over 55% of the national economy.
However, as we saw last year when the economy rebounded 3.6%, it will recover again, with estimates this time around suggesting the rebound will be closer to 5-6%.
The December quarter is expected to be supercharged as people headed back to the pubs, take trips away and get some well-needed retail therapy.
Australian indices
- ASX 200 rose 0.026% to 7,383.80.
- ASX24 futures fell 0.3% to 7,337.
- S&P/ASX Small Ordinaries rose 0.023% to 3,527.90.
- All Ordinaries rose 0.020% to 7,690.00.
US markets
The US was mostly higher on Monday, with technology out-performing.
Shares in Apple rose 1.2% after launching new AirPods and MacBook Pro laptops.
Investors responded to slower economic growth in China and a surprise fall in US production in September. The Chinese economy expanded 4.9% in the year to September - the slowest rate in a year.
Investors also braced for more US earnings figures to be released over the week.
US indices
- Dow Jones fell 0.1% to 35,258.61.
- S&P 500 rose 0.3% to 4,486.46.
- Nasdaq rose 0.8% to 15,021.81.
European markets
Markets traded lower on Monday in Europe due to weaker economic growth in China weighing on luxury good makers.
Shares in LVMH fell by 2.2%.
Oil and gas shares fell 0.2% in response to mixed oil prices.
In London trade shares in Rio Tinto fell by 0.7% and shares in BHP fell by 0.1%.
European indices
- STOXX 600 fell 0.5% to 467.04.
- German Dax fell 0.7% to 15,474,47.
- UK FTSE fell 0.4% to 7,203.83.