The Australian share market is set to catch up to Wall Street, which closed high at the end of last week.
ASX futures this morning implied that the local bourse will rise by 92 points, or 1.4%.
US shares continued a good run last week, with the Dow finishing up 2.6%, the S&P 500 adding 2.5% and the Nasdaq gaining 2.9%.
Winners and losers included BHP (-4.8%), Rio (-3.5%), Apple (+7.6%), Amazon (-6.8%), Intel (+10.7%), Alphabet (+4.3%) and Microsoft (+4%).
The dollar slid 0.6% back to 64.11 US cents.
European markets remained mixed or flat. The continent-wide FTSEurofirst 300 index rose by 0.2% to five-week highs after falling as much as 1.1%, while the UK FTSE 100 index fell by 0.4%. The Stoxx 50 was up 0.2%, as was Germany’s DAX.
Contrary to predictions, the French and German economies grew 0.2% and 0.3% respectively in the September quarter.
Central bank meeting week
This week sees a raft of central bank meetings that may light the way to some of the answers investors are seeking about when the rate pain may end.
Our own Reserve Bank kicks things off, as is customary, on Cup Day (tomorrow), the US Federal Reserve will meet on Wednesday and the Bank of England is slated to meet on Thursday – the same day Norway and India’s central banks will meet.
There is widespread consternation at Fed Chair Jerome Powell’s latest remarks, which flag aggressive rate rises until the end of the year, with 0.75% predicted for Wednesday’s meeting and the same again as a Christmas surprise – adding 1.50% to close out 2022.
The ‘supersize’ hikes show no sign of letting up.
According to US commentator Bill Zox of Brandywine Global: “I believe 75 is the new 25 until something breaks, and nothing has broken yet.
“The Fed is not anywhere close to a pause or a pivot. They are laser-focused on breaking inflation. A key question is what else might they break.”
Energy giants report huge earnings
Exxon Mobil Corporation (NYSE:XOM) announced its quarterly earnings on Friday, which have increased an astounding 198% year-on-year to $4.68 per share – the price was $1.57 a year ago – thrashing guidance of $3.79 per share.
The company’s adjusted earnings now sit at $19.7 billion, up from $6.8 billion reported in the previous quarter.
Fellow energy company’s making hay include Shell and Chevron. Together with Exxon Mobil the three companies shares rallied, up 6%, 3% and 4%, respectively.
Brazil on a knife edge
Voting has resumed in Brazil, where the choice is between the current populist right-winger Jair Bolsonaro against left-leaning former president Luiz Inácio Lula da Silva. Bolsonaro has taken a leaf out of the Trump election playbook, with reports of voter suppression and no clear statement that he will accept the results of the election if it goes da Silva’s way.
Da Silva topped the first-round elections earlier this month with 48% of the vote, with Bolsonaro polling at 43%. Early signs were that Bolsonaro was in the lead in this second showing.
This election has broader consequences. Brazil is home to the planet’s lungs – the Amazon rainforest. Bolsonaro has presided over the destruction of 10,000 square miles of this precious ecosystem.
In other news
Over the week Brent crude rose by US$2.27 or 2.4%, while Nymex rose by US$2.85 or 3.4% – but on Friday oil prices corrected by around 1.3% as COVID 19 lockdowns continued in China.
Brent crude fell by US$1.19 or 1.2% to US$95.77 a barrel, while US Nymex crude lost US$1.18 or 1.3%, trading at US$87.90 a barrel.
Keep an eye on gas prices in the coming months – Goldman Sachs (NYSE:GS) says we could see oil soar past $200 a barrel.
Base metal prices fell on Friday by between 1.1% and 4.3% with zinc down most. Lead went the other way, rising by 7.1% after Bloomberg advised it would include the metal in its benchmark commodity index.
The gold futures price fell by US$20.80 an ounce or 1.2% to US$1,644.80 an ounce. Spot gold was trading near US$1,642 an ounce at the end of the week, and over the week it fell by US$11.50 an ounce or 0.7%.
Iron ore futures gained 20 US cents or 0.2% to US93.01 a tonne, while it fell over the week by US$1.85 or 2%.