On what is one of the saddest days for Australia, Australians and many around the world with the passing of Olivia Newton John, (and one of the saddest weeks with the passing of Judith Durham) it would be nice to reflect on the legacies both entertainers left.
Yet, as Oliver Stone reminded us 10 years ago, money never sleeps and there’s always a market open somewhere.
While a lot of Australians will be watching coverage and remembering ONJ in their own way, investors will be glued to the big caps' earnings reports, iron ore futures, the rise of copper, gold and oil and the moves of speculative small cap companies.
All of this in the context of what Wall St did overnight.
Despite early gains, Wall St couldn’t hold onto them as investors looked ahead to Wednesday’s inflation data.
While the Dow Jones Industrial Average ended up 29 points, or 0.1%, the S&P 500 fell 0.1%, and the Nasdaq Composite dropped 0.1%. All three indexes had been solidly in the green earlier in the day and all three were on a rally since mid-June.
Up until yesterday, the S&P 500 has gained 14% since hitting an intraday low for the year.
The upwards signs were due to cooling inflation, expectations the Federal Reserve would slow down the pace of its interest rate hikes and better-than-expected earnings.
Yet, the volatility remains and markets will continue to fluctuate.
So we continue to report on the numbers, which tell us that ASX Futures (SPI 200) imply the ASX 200 will open 8 points lower, down -0.12%.
Here’s what we saw (source Commsec)
- The Euro rose from lows near US$1.0173 to around US$1.0220 and was near US$1.0190 at the US close.
- The Aussie dollar rose from near US69.30 cents to US70.05 cents and was near US69.80 cents at the US close.
- The Japanese yen strengthened from near 135.45 yen per US dollar to JPY134.40 and was near JPY135 at the US close.
- Global oil prices rose around 2% on Monday. Commsec’s Craig James said, “Traders cited firm economic data driving prices, notably stronger export growth in China and Friday's strong US jobs report. Despite recession fears, the data suggested that demand for oil may not ease as much as expected. Reuters cited a research report from Goldman Sachs (NYSE:GS) with the broker saying the case for higher oil prices remains strong, with the market in a larger deficit than they expected in recent months.”
- The Brent crude price rose by US$1.73 or 1.8% to US$96.65 a barrel.
- The US Nymex crude price rose by US$1.75 or 2.0% to US$90.76 a barrel.
- Base metal prices were mixed on Monday. Nickel, zinc and tin fell as much as 2.4%. Other metals rose as much as 4.4% with lead up the most.
- The gold futures price rose by US$14.00 an ounce or 0.8% to US$1,805.20 an ounce. Spot gold was trading near US$1,789 an ounce at the US close.
- The iron ore futures rose by US$1.84 or 1.7% to US$110.95 a tonne.
Australian market
Is a digital currency on its way to the RBA?
The Reserve Bank of Australia (RBA) is exploring use cases for an Australian central bank digital currency (CBDC).
The RBA is working closely with the Digital Finance Cooperative Research Centre on a research project to investigate the currency, which is expected to take about a year to complete.
A limited-scale CBDC pilot will operate in a "ring-fenced" environment for an unspecified period of time.
Industry has been invited to participate and develop use cases demonstrating how a CBDC could be used to provide innovative and value-added payment and settlement services to households and businesses.
The RBA and DFCRC will then choose a range of different cases for the pilot.
"Considerable research has been undertaken by central banks, including the Reserve Bank, into the feasibility and possible technical design of CBDC, in particular exploring the potential use of new technologies such as distributed ledger technology," the RBA says.
"A question that has received less attention to date, especially in countries like Australia that already have relatively modern and well-functioning payment and settlement systems, is the use cases for a CBDC and the potential economic benefits of introducing one.
"The project with the DFCRC will help address this gap by focusing on innovative use cases and business models that could be supported by the issuance of a CBDC.
"The project will also be an opportunity to further understanding of some of the technological, legal and regulatory considerations associated with a CBDC."
US markets
News that the US$430 billion Inflation Reduction Act had passed the Senate had investors thinking. Automakers rose 3-4% in response to the news with shares in Ford up 3.1% and General Motors up 4.2%.
The US Senate passed a $US430 billion ($622.75) bill intended to fight climate change, lower drug prices and raise corporate taxes.
The Senate approved the legislation by a 51-50 vote along party lines. Vice president Kamala Harris broke the tie.
The Democrats called the legislation "the boldest clean-energy package in American history".
"The Senate is making history," Senate majority leader Chuck Schumer said.
"To Americans who've lost faith that Congress can do big things, this bill is for you," he said. "This bill is going to change America for decades."
The Information Technology sector lagged.
Chipmaker Nvidia Corp slid 6.3% as the company said it expects second-quarter revenue to decline 19% from the prior quarter due to weakness in gaming.
European markets
Were higher on Monday.
The pan-European STOXX 600 index rose by 0.7%. Leading the gains were financial services (+1.7%) and autos (+2.1%) but healthcare was flat.
Danish brewer Carlsberg rose 1.5% after lifting its profit growth outlook for 2022, citing a strong performance in Europe and Asia.
The German Dax index gained 0.8% and the UK FTSE index rose by 0.6%. In London trade, shares of Rio Tinto rose by 0.6% but BHP shares fell by 0.2%.