The ASX is expected to open higher this morning, following a late rally on the S&P 500 overnight.
ASX SPI 200 futures are up 0.1% to 7,400 as of 8.52am AEDT.
Here’s what we saw:
- The Aussie dollar fell from highs near US72.25 cents to lows near US71.85 cents and was near US71.95 cents in afternoon US trade.
- Global oil prices fell by 0.1% on Wednesday. Investors are debating the major economies’ move to release oil onto the market from strategic reserves.
- The Brent crude price fell by US6 cents or 0.1% to US$82.25 a barrel.
- The US Nymex crude price fell by US11 cents or 0.1% to US$78.39 a barrel.
- Base metal prices rose by between 0.5-2.8% on Wednesday with zinc up the least and tin up the most.
- The gold futures price rose by US50 cents to US$1,784.30 an ounce.
- Spot gold was trading near US$1,788 an ounce at the US close.
- Iron ore rose by US$4.00 or 4.0% to US$103.45 a tonne.
On the topic of commodity prices, Fitch Global Solutions has indicated that the global steel price rally could be over.
This is despite upside in US prices following President Biden’s Infrastructure Bill passing into law.
“Outside the US, Chinese steel demand from the construction industry will continue to weaken in 2022-2025 as project pipelines thin and risks mount on the country’s property sector, dampening domestic steel prices and bringing the global average down in 2022 along with European prices,” Fitch noted.
“Over the long term, we maintain our view for global steel prices to remain on a downward trend and highlight the start of a paradigm shift in the steel market where ‘green’ steel takes centre-stage at the expense of traditional steel produced at the blast furnace.”
On the oil front, the head of the International Energy Agency has called on OPEC and its allies to bring oil prices down to “reasonable levels”.
"I very much hope to see in the next meeting or meetings they … make the necessary steps in order to comfort the global oil markets and help bring the prices down at reasonable levels," IEA's Fatih Birol told reporters.
Birol took aim at Russian gas as well.
"Russia can easily increase exports to Europe about 15% … and significantly comfort the European gas markets," Birol said.
Gas prices in Europe have skyrocketed as Russia, which is the region’s major supplier, is slow on deliveries.
OPEC nations and their allies will review the slowdown strategy in December.
Australian market
Energy and iron ore stocks led the way yesterday with iron ore also set to have an impact in today’s trading, but it was tech that brought the market down.
That said, the ASX is expected to open higher this morning, although a quiet day is expected.
The Black Friday sales have already begun and are likely to provide a boon for the retail sector.
Myer is set to hit big highs, while JB Hi-Fi, Kmart and Kogan.com have already bombarded inboxes with early offers.
Today, the Australian Prudential Regulation Authority (APRA) will publish institution-level financial statistics for the general insurance industry.
The stats are based on regulatory filings for the September quarter.
Suncorp Ltd has been one of the first to comment, telling investors that the data includes statistics for its subsidiary AAI Limited.
"Further, included within the regulatory filing are the results of AAI's Liability Adequacy Test (LAT), COVID-19 related impacts and natural hazard events for the September quarter."
"The LAT deficiency for September 2021 ($33 million) is significantly less than the September 2020 quarter ($173 million) reflecting improved underlying business performance.
"This deficiency is expected to unwind by December 31, 2021, and therefore be profit neutral for 1H22."
The pandemic saw several factors affect Suncorp in Q122.
These included reduced motor claims frequency from lockdowns, the provision of consumer and industry support packages, less annual leave taken and other pandemic-related provisions.
This has led to pre-tax net profit of approximately +$60 million.
Suncorp last traded at $11.09.
Australian indices (at time of writing)
- ASX 200 rose 0.069% to 7,405.50.
- ASX24 futures rose 0.1% to 7,400.
- S&P/ASX Small Ordinaries rose 0.060% to 3,511.10.
- All Ordinaries rose 0.056% to 7,729.80.
US markets
It was the last day of trading before the Thanksgiving holiday in the US. There will be no trading in the US and it is expected that most Americans will take an extended weekend, so expect things to be quiet over the next few days.
Despite a hawkish tone from the Fed, the market performed reasonably well.
Investors are keeping an eye on the strong US jobs market and high inflation, with SF Fed president Mary Daly saying, "those are the things that would say, looks like we need faster tapering".
An FOMC November meeting saw a case for a faster taper, with the minutes suggesting the Fed would lift interest rates "sooner than participants currently anticipated if inflation continued to run higher than levels consistent with the committee's objectives."
There were plenty of economic releases ahead of the Thanksgiving break, which showed jobless claims hitting their lowest level since 1969.
Consumer income and spending are higher than expected, however new home sales were below expectations
“As we look forward to Thanksgiving, there is much to be thankful for in this fiscally-stimulated recovery,” said a note from Oxford Economics.
“Still, the recovery process isn’t complete, with spending on services well below its pre-pandemic trend, and the transition from public- to private-driven growth will be delicate.” The broad-based S&P 500 gained 0.2% to 4,701.46, just a few points shy of an all-time record.
Real Estate, IT and Discretionary rose as the US 10-year bond yield fell 3% to 1.63%.
US indices
- Dow Jones was flat at 35,804.28.
- S&P 500 rose 0.2% to 4,701.46.
- Nasdaq rose 0.4% to 15,845.23.
European markets
European shares halted a four-day losing streak, led by Telecom Italia which surged 15.6%.
However, Europe’s worsening COVID-19 situation is causing trepidation in the market amid fears of severe restrictions.
Telecom Italia lifted the European telecoms sector by 1.2%, after news reports that KKR is considering boosting its offer for the company.
Vivendi had called the initial offer too low.
Aside from COVID fears, European stocks are also battling rate hikes and inflation concerns sparking fears of a weaker economic growth outlook.
Travel stocks slid by over 1% on Wednesday, making it seven straight days of decline.
“People are waiting to see what impact COVID measures will have on economic growth in Q4 and next year. If the situation deteriorates and we see more aggressive responses from governments, there will be concerns over the overall European economic growth profile,” said Nick Nelson, head of European equity strategy at UBS.
European indices
- STOXX 600 rose 0.092% to 479.69.
- German Dax fell 0.4% to 15.878.39.
- UK FTSE rose 0.3% to 7,286.32.