US markets were higher but the ASX is set to open lower as iron ore also drops. Interestingly, iron ore soared yesterday by around 8% overnight on word of economic easing in China.
The ASX SPI 200 futures were trading 0.4% lower to 7,390 as of 8.23am AEDT.
Here’s what we saw:
- The Aussie dollar rose from lows near US71.17 cents to highs near US71.81 cents and was near US71.75 cents in afternoon US trade.
- Global oil prices rose on Wednesday as US crude supplies eased. Commsec reports “US output rose to 11.7 million barrels per day last week. The US Energy Department also said gasoline and distillate inventories rose more-than-anticipated, while crude stocks fell by 240,000 barrels, less-than-expected.”
- The Brent crude price rose by US38 cents or 0.5% to $US75.82 a barrel.
- The US Nymex crude price added US31 cents or 0.4% to $US72.36 a barrel.
- Zinc was 1.5% higher as investors assess production cuts at smelters in China due to environmental curbs.
- Lead gained 7.5%.
- Tin was up 1.6%.
- Copper was 0.4% higher.
- Aluminium dipped 0.2%.
- The gold futures price rose by US80 cents or less than 0.1% to $US1,785.50 an ounce.
- Spot gold was trading near $US1,785 an ounce in afternoon US trade.
Australian market
The S&P/ASX200 closed 1.25% higher, up 91.5 points to 7,405.4 yesterday, its biggest gain since October 4.
All market sectors were in positive territory.
That trend is set to reverse this morning.
ANZ cops $25 million fine
Another week, another banking scandal.
This week it is ANZ Banking Corporation Ltd in the news.
The Australian Securities and Investment Commission (ASIC) is taking ANZ to court over non-payment of nearly $200 million in benefits to 580,447 customers from the mid-1990s to September this year.
ASIC has launched proceedings in the Federal Court claiming ANZ has failed to provide the agreed benefits to customers with offset transaction accounts or a ‘Breakfree’ package.
Benefits included fee waivers and interest rate discounts.
ANZ has admitted to its failings and that its systems and processes were incapable of delivering those benefits consistently.
"ANZ's conduct was long-standing and impacted over half a million customers," ASIC deputy chair Sarah Court said.
"These customers were entitled to receive the benefits they signed up for and in many instances paid for. This case is yet another example of a widespread system failure by a major bank impacting thousands of customers."
While the case is yet to receive a hearing date, ANZ has said in a statement on Thursday, "While ASIC has not alleged deliberate conduct, ANZ acknowledges its conduct fell short of expectations and has co-operated fully with ASIC during its investigation."
Australia to get its own digital currency?
The Australian Government is considering regulations for cryptocurrencies that would pull the likes of Bitcoin out of the shadows and into the light.
It is also weighing up a central bank-issued digital currency.
Yesterday Treasurer Josh Frydenberg announced the government was working with the Reserve Bank on the feasibility of a central cryptocurrency in Australia.
Frydenberg did the media rounds on Wednesday, suggesting it was time for cryptocurrencies to operate under a “considered regulatory framework" that would require them to apply for financial licences to "give consumers a little bit more certainty and confidence about the parties that they're dealing with".
Australia is not looking to shut cryptocurrency down and recognises the importance of the digital currency movement.
Frydenberg said in his speech, that a “comprehensive payments and crypto-asset reform plan” would be implemented to boost innovation and consumer uptake of digital technologies.
The move comes after the Commonwealth Bank of Australia (ASX:CBA) last month announced it would allow customers to buy and sell cryptocurrencies on its platforms.
The importance of regulation was highlighted this week after myCryptoWallet, one of Australia’s highest-profile cryptocurrency trading platforms, was reported to have collapsed on Tuesday.
Frydenberg told the Australia Israel Chamber of Commerce and Industry that reforms would address “the ambiguity that can exist about the regulatory and tax treatment of crypto assets and new payment methods.
“For consumers, these changes will establish a regulatory framework to underpin their growing use of crypto assets and clarify the treatment of new payment methods.
“Australia must retain its sovereignty over our payment system. These are significant shifts that we need to be in front of.
“What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalise on the convergence between finance and technology.”
Consumer Action Law Centre chief executive, Gerard Brody welcomed the action saying, “There is no doubt that crypto exchanges need to be regulated more akin to banks - these entities are now holding significant sums of peoples’ money and investments, and there needs to be accountability.”
US markets
Travel shares led the gains on Wall St overnight.
Core CPI is expected to rise.
Commsec reports, “We expect a further increase in US CPI inflation in November. Gasoline prices rose for the 12th consecutive month and will continue to underpin headline inflation. At the same time, strong demand, rapidly rising employment costs, ongoing supply constraints and rising inflation expectations all point to another rise in the core CPI.
“We also anticipate the monthly annualised lift in the trimmed CPI will stay firm and reinforce that inflation in the US is broadening and high. In our view, the trimmed CPI is a more accurate measure of underlying inflation pressures."
Gamestop down
Gamestop is one of the most talked about stocks of 2021.
When a bunch of Reddit users bought up shares of the struggling video game retailer, its shares soared.
Reddit was hitting back at Wall St investors who said GameStop was doomed to fail.
It was billed as a David vs Goliath event and GameStop became one of the most heavily bet-against stocks on the market.
The Reddit community r/WallStreetBets sent the stock flying from about $17 to $483 and back to approximately $90 after the inevitable correction.
Several months on and while the company’s shares sit at US$173.65 per share, it struggled this quarter.
Shares of GameStop Corp (NYSE:GME). fell more than 3% yesterday (finishing the day 2.3% down) following mixed third-quarter earnings, including a larger-than-expected quarterly loss.
GameStop lost $105.4 million, or $1.39 a share, in the quarter, compared with a loss of $19 million, or 29 cents a share, in the year-ago period.
Sales did rise to $1.3 billion from $1 billion a year ago due to "new and expanded brand relationships."
Inventory was $1.14 billion at the end of the quarter as the company sought to front-load investments in inventory "to meet increased customer demand and mitigate supply chain issues," GameStop said.
The company ended the quarter with $1.41 billion in cash and equivalents and no debt other than a $46.2 million low-interest, unsecured loan.
European markets
European share markets closed lower on Wednesday.
The pan-European STOXX 600 was pushed down by retail stocks down by 1.9%.
The talk yesterday was about inflation with ECB vice president Luis de Guindos saying Eurozone inflation will take longer to fall back to target than earlier thought.
On a positive note, he did say there was little evidence that high prices are becoming embedded in wages.
High inflation is complicating a crucial policy decision due on December 16.
"We are fully convinced that inflation will start to decline at the beginning of next year and in the second half of next year inflation will start to decelerate even more and will converge with our target of 2%," de Guindos told a conference.
"Perhaps the convergence towards the 2% target will take a little bit longer but no doubt that inflation will decelerate in 2022," he added.
Inflation hit a record high 4.9% last month. Analysts are saying it won’t be until late 2022 that will come back down to 2% or under.
Despite inflation figures, wage growth is expected to be higher.
"But wage growth is expected to be higher in 2022 than in 2021," de Guindos said. "And we have to ... stay vigilant with respect to the evolution of wages and the wage bargaining process.
"I do not think that this will derail the euro area recovery," he said. "Growth factors are quite strong in the medium term."