Stronger than expected retail sales data saw Wall St surge overnight, with the ASX set to ride the momentum.
The ASX is expected to open 0.3% higher to 7,428 as of 8.32am AEDT.
Here’s what we saw:
- The Aussie dollar fell from highs near US73.55 cents to lows near US72.95 cents and was near session lows in afternoon US trade.
- Global oil prices were mixed on Tuesday. According to the acting head of the US Energy Information Administration, a release of oil from the US Strategic Petroleum Reserve would likely have only a short-lived impact on oil markets. However, OPEC Secretary-General Mohammad Barkindo expects an oil supply surplus as early as December.
- The Brent crude price rose by US38 cents or 0.5% to US$82.43 a barrel.
- The US Nymex crude price fell by US12 cents or 0.1% to US$80.76 a barrel.
- Base metal prices fell by as much as 2.9% on Tuesday with aluminium down the most.
- Zinc rose 0.1%.
- The gold futures price fell by US$12.50 or 0.7% to US$1,854.10 an ounce.
- Spot gold was trading near US$1,850 an ounce at the US close.
- Iron ore rose by US$1.25 or 1.4% to US$90.40 a tonne.
Australian market
Commonwealth Bank of Australia (ASX:CBA)’s Q1 profit is $2.2 billion and according to chief executive Matt Comyn, it is all down to the bank making good progress on its strategy.
The bank’s unaudited cash profit climbed 22% for the three months ended September 30.
It was $1.8 billion in the same quarter last year.
The offset is the cash profit in CBA’s first quarter declined 9% versus the average of the preceding two quarters.
“Through the first quarter of FY22, our focus has remained on supporting our people, customers and communities as the economy recovers from the impact of COVID-19,” Comyn said.
“Our focus on operational execution ensures we are well placed to provide this support as activity restrictions continue to ease. This was reflected in strong, above-system volume growth in core markets in 1Q22, continued sound portfolio credit quality and balance sheet strength.”
Nufarm Ltd also reported a profit. Its net profit after tax increased to $65 million.
Revenues were 10% higher to $3.2 billion with underlying earnings before interest, tax, depreciation & amortisation (EBITDA) of $370 million, a 51% increase on the prior corresponding period.
"This year's results have benefited from both management initiatives that drove earnings growth, as well as favourable agricultural conditions," managing director and CEO Greg Hunt said.
"Early indications from the first six weeks of FY22 are that this positive momentum should continue.
"The outlook for soft commodity prices remains positive and improved seasonal conditions in key grain-producing regions is resulting in continued demand for seeds and crop protection products."
A very crypto Christmas
An online survey conducted by cryptocurrency trading platform Crypto.com reports that more than a quarter of Australians plan to buy crypto-centric gifts for Christmas.
The platform surveyed more than 2,000 Australians aged between 18 and 59 who had been involved with the currency in the last 12 months.
Approximately, 26% said they were planning to buy crypto-centric gifts, including crypto-coins, such as Bitcoin and Ethereum.
"Australians are clearly very keen to adopt cryptocurrencies and integrate their use into day-to-day spending, and we’re excited about helping them," said Crypto.com's APAC general manager Karl Mohan.
Crypto themed socks and hoodies were also on the agenda.
Interestingly, Bitcoin took a breather overnight.
“Yesterday, bitcoin took a breather as it sold off from all-time highs to test support around US$60,000. This may stall the narrative that some have of seeing US$100,000 bitcoin by year-end, however, is unlikely to dampen sentiment too much with fundamentals pointing towards a strong year-end,” eToro analyst Josh Gilbert said.
“The sell-off may have been sparked by the passing of the new infrastructure bill in the US, which was signed by Joe Biden. The bill includes tax reporting and provisions that apply to crypto-assets and NFTs.
“Bitcoin reserves across exchanges continue to fall, according to data from Crypto Quant. The data indicates that supply continues to drop as demand increases, with investors choosing to HODL their bitcoin rather than sell. As we know, when supply drops and demand increases, prices often tend to increase as a result.
“At the start of this week, bitcoin also went through its most significant upgrade in four years, Taproot. Although we’ve seen the market rally to record highs before this, it’s unlikely that everyday investors yet understand the significance of Taproot, therefore the upgrade might not yet be priced in.
“VanEck Bitcoin Strategy Futures ETF will go live this week in the US, and investors are anticipated to watch the inflows very closely. This will not only reaffirm the positive sentiment if strong, but may also unsettle the market if the volume is low.
“The US inflation print last week illustrated more than ever that keeping cash in the bank will mean your dollars whittle away over time. As a result, investors will continue to turn towards financial assets such as bitcoin, as it looks to assert itself as a serious choice for a hedge against inflation.
“Bitcoin and the rest of the crypto market has experienced a healthy correction at the start of this week. However, long-term investors should remember to focus on the fundamentals of investing, continue to do their research into assets and only invest what they realistically can afford."
Australian indices
- ASX 200 fell 0.67% to 7,420.40.
- ASX24 futures rose 0.3% to 7,428.
- S&P/ASX Small Ordinaries fell 0.90% to 3,553.20.
- All Ordinaries fell 0.66% to 7,747.10.
US markets
Retail sales rose by 1.7% in October. Chain store sales were 14.7% higher in the past week compared with a year ago after lifting an annual 15.6% in the previous week.
Further to this, industrial production rose by 1.6% in October and import prices were 1.2% higher in October with export prices up 1.5%.
The unexpected sales results saw Wall St close higher in trading yesterday.
The NAHB housing market was also up from 80 to 83 in November.
Despite the retail figures, shares in Walmart fell 2.55% as the United States largest retailer lifted annual sales and profit forecasts but supply chain issues hit third-quarter margins.
Shares in Home Depot were 5.7% higher after beating same-store sales estimates.
Will the oil price drop?
While retail sales rose, oil prices are expected to drop after two months of gains and no signs of abatement in that time.
The International Energy Agency believes the price increases may stall in the coming months as producers start pumping out more oil.
“The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon,” the IEA’s monthly report says.
This is contrary to the consensus of most Wall Street banks projecting only modest supply growth in the next year.
Meanwhile, President Joe Biden is unsuccessfully pushing for OPEC and its allies to pump more oil. If it doesn’t happen, the IEA believes the US is ready to cover the gap.
The IEA also says rising COVID cases in Europe and subsequent movement restrictions may depress oil demand and cause prices to slump.
Industrial demand is also weaker than expected.
US indices
- Dow Jones rose 0.2% to 36,142.22.
- S&P 500 rose 0.4% to 4,700.9.
- Nasdaq rose 0.8% to 15,973.86.
European markets
Markets in Europe followed in Wall St’s footsteps and were firmer.
Dutch technology investor Prosus led the way with a 4.2% rise after forecasting higher profits for the first half of 2022.
French luxury group Kering was 4.4% higher after its top brand Gucci said it expected 2021 revenues to be in line or higher than their pre-pandemic level.
The pan-European STOXX 600 continues to rise to record highs. The German also moved to record highs.
In London Rio Tinto and BHP both fell by 1.3%.
European indices
- STOXX 600 rose 0.17% to 489.27.
- German Dax rose 0.6% to 16,247.86.
- UK FTSE fell 0.3% to 7,326.97.