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Key Events​

ASX corporate actions occurring today:
  • Trading ex-div: Tribune Resources (TBR) – $0.20, Rand Mining (RND) – $0.10
  • Dividends paid: None
  • Listing: None
Economic calendar (AEDT):
  • 9:00 am: AI Group Industry Index
  • 12:45 pm: China Caixin Manufacturing PMI
  • 1:00 am: US ISM Manufacturing PMI
  • 1:00 am: US JOLTs Job Openings
  • 5:00 am: Fed Interest Rate Decision
 

Industry ETFs​

Thu 02 Nov 23, 8:21am (AEDT)
NameValue% Chg
Commodities
Steel63.3686+1.14%
Uranium27.08+0.89%
Gold Miners28.11+0.36%
Silver20.97-0.05%
Strategic Metals56.91-0.56%
Copper Miners32.66-0.58%
Lithium & Battery Tech47.26-1.01%
Industrials
Construction49.83+3.99%
Aerospace & Defense110.57+0.65%
Agriculture21.98-0.14%
Global Jets14.84-0.54%
Healthcare
Biotechnology115.21+1.35%
Cannabis5.27-1.31%
NameValue% Chg
Cryptocurrency
Bitcoin17.53+0.46%
Renewables
Hydrogen6.04-0.33%
CleanTech8.91-1.00%
Solar41.52-1.10%
Technology
Semiconductor452.8+2.35%
Robotics & AI23.1+1.45%
Electric Vehicles21.07+1.01%
Video Games/eSports50.52+0.70%
FinTech18.84+0.69%
Cybersecurity23.1-
Sports Betting/Gaming14.68-0.34%
E-commerce16.91-0.35%
Cloud Computing17.5-1.80%
 

Sectors to Watch: Breadth Things​

A bit of a short one today. Major US benchmarks continued to bounce but when you look at the above ETF performance – Things were relatively mixed. Just breadth things. Sectors such as Energy, Staples and sub-sections of tech/materials underperformed major benchmarks by a wide margin.

The Fed Pause and Powell's Outlook​

The Fed kept interest rates at a 22-year high of 5.25% to 5.5% for a second straight meeting, in-line with market expectations. Powell's speech was a little less hawkish and contained some subtle changes. Here are the key takeaways and highlights:

  • The economy remains 'strong': Officials made few changes to the statement but upgraded their description of the pace of economic growth from 'solid' to 'strong'
  • Yields are doing work: Some officials noted the recent surge in long-term Treasury yields may reduce the need to further hikes. The statement added the words 'financial conditions' to "tighter financial and credit conditions for household and businesses are likely to weigh on economic activity, hiring and inflation."
  • Powell's opening statement: Reiterated the strong state of the economy including unemployment still low at 3.8%, immigration has returned to pre-pandemic levels, job gap remains an issue and wanted more confidence that inflation is heading towards 2.0%
  • Underestimating the consumer: "We may have underestimated the balance sheet strength of households and small businesses ... We still have to get to pre-pandemic savings, we may not be there yet. Clearly, people are still spending."
  • Locking in lower rates: Powell noted how plenty of borrowers have locked in lower rates as one of the reasons why current tightening hasn't slowed the economy enough.
  • No cuts, no hikes: "The question of rate cuts just doesn’t come up," said Powell, adding that "it’s fair to say the question we’re asking is should we hike more." But he also noted that "the idea it would be difficult to raise again after stopping for a meeting or two is just not right."
How did the market react: Futures are currently expecting a 28% chance of another rate hike in January 2024 before rate cuts begin to take place in June 2024. Interestingly, the odds of rate cuts into March 2024 was beginning to tick upwards, now at 14.4%.

The Cost of Doing Nothing​

The Bank of Japan left their flagship yield curve control policy more or less unchanged bar a small tweak which changed its 1% upper limit into a reference band. In other words, the Bank will defend it by buying more bonds but not as fiercely as it once did. But when you play with markets, you play with fire. And this market is having none of it.

Not only did bond vigilantes sell more Japanese bonds, but participants also tackled the currency markets. The USD/JPY cross-rate is through 150 for the first time since June 1990 and the EUR/JPY cross-rate is through 160 for the first time since August 2008.

USDJPY_2023.png
 

Key Events​

ASX corporate actions occurring today:
  • Trading ex-div: Wotso Property (WOT) – $0.03
  • Dividends paid: Arena REIT (ARF) – $0.04
  • Listing: None
Economic calendar (AEDT):
  • 11:30 am: Australia Balance of Trade
  • 11:30 am: Australia Home Loans
  • 11:00 pm: UK Interest Rate Decision
 

CENTRAL BANKS​

  • Fed on hold, Powell says policymakers mixed on end of rate hikes (Bloomberg)
  • Bank of England keeps rates at 15-year high (Reuters)
  • BOJ likely timing of an exit around spring next year (Reuters)
  • Norway's central bank holds rates at 4.25%, signals possible year-end hike (Reuters)

ECONOMY​

  • US weekly jobless claims rise marginally, productivity accelerates (Reuters)
  • Japan PM Kishida announces US$87bn extra budget to boost growth (Bloomberg)
  • China's property sector loans fall for first time on record (Bloomberg)
  • Eurozone manufacturing slump intensifies in October, new orders fall (Reuters)
  • German unemployment rose more than forecast in October (Reuters)
  • South Korean inflation unexpectedly accelerates (Bloomberg)
  • US 2023 holiday sales expected to rise at slowest pace in five years (Reuters)

Industry ETFs​

Fri 03 Nov 23, 8:31am (AEDT)
NameValue% Chg
Commodities
Steel65.31+3.06%
Copper Miners33.59+2.85%
Lithium & Battery Tech48.02+1.61%
Strategic Metals57.81+1.58%
Uranium27.41+1.22%
Gold Miners28.26+0.53%
Silver20.87-0.48%
Industrials
Global Jets15.33+3.30%
Construction51.35+3.05%
Aerospace & Defense112.83+2.04%
Agriculture22.24+1.18%
Healthcare
Cannabis5.61+6.45%
Biotechnology116.82+1.40%
NameValue% Chg
Cryptocurrency
Bitcoin17.69+0.91%
Renewables
Hydrogen6.45+6.79%
CleanTech9.28+4.15%
Solar43.04+3.66%
Technology
FinTech19.56+3.82%
Robotics & AI23.85+3.25%
Sports Betting/Gaming15.1403+3.14%
Electric Vehicles21.7+2.99%
E-commerce17.39+2.84%
Cloud Computing17.99+2.80%
Semiconductor463.09+2.27%
Video Games/eSports51.61+2.16%
Cybersecurity23.29+0.82%
 

Key Events​

ASX corporate actions occurring today:
  • Trading ex-div: AVA Risk Group (AVA) – $0.002, Qualitas Real Estate Income Fund (QRI) – $0.01
  • Dividends paid: The Reject Shop (TRS) – $0.06, K&S Corp (KSC) – $0.08, GenusPlus Group (GNP_ – $0.02
  • Listing: None
Economic calendar (AEDT):
  • 6:00 pm: Germany Balance of Trade
  • 11:30 pm: Canada Unemployment Rate
  • 11:30 pm: US Non Farm Payrolls & Unemployment Rate
  • 1:00 am: US ISM Services PMI
 

CENTRAL BANKS​

  • ECB's Schnabel says can't close door to further rate hikes (Bloomberg)
  • BoE's Bailey vows to hold line on inflation in face of sickly UK outlook (FT)

GEOPOLITICS​

  • Israel armed forces complete encirclement of Gaza (FT)
  • House Republicans pass US$14.3bn Israel aid package (NY Times)
  • US Intelligence Community evaluating Iran efforts to avoid regional war (CNN)
  • Israeli PM Netanyahu loses core support after Hamas assault on Israel (FT)
  • China warms up to Micro amid easing tensions with the US (Reuters)

ECONOMY​

  • US labour market loosens as job gains slow (Reuters)
  • US unemployment rises by more than expected to 3.9% (Bloomberg)
  • Canada unemployment rises to 5.7%, above analyst expectations (Reuters)
  • German exports fall more than expected in September (Reuters)
  • China services PMI weaker than expected, remains barely in expansion (Bloomberg)
  • Depressed guidance ratio, outsized Q4 estimate cuts add to scrutiny on earnings rebound expectations (Bloomberg)

Industry ETFs​

Mon 06 Nov 23, 8:23am (AEDT)
NameValue% Chg
Commodities
Gold Miners29.47+4.28%
Strategic Metals59.44+2.82%
Lithium & Battery Tech49.28+2.62%
Silver21.22+1.68%
Copper Miners34.04+1.34%
Steel65.64+0.51%
Uranium27.0-1.50%
Industrials
Global Jets15.94+3.98%
Construction52.9+3.02%
Agriculture22.4+0.72%
Aerospace & Defense113.42+0.52%
Healthcare
Cannabis5.8+3.39%
Biotechnology119.79+2.54%
NameValue% Chg
Cryptocurrency
Bitcoin17.43-1.47%
Renewables
Solar44.7+3.86%
CleanTech9.62+3.66%
Hydrogen6.67+3.41%
Technology
Sports Betting/Gaming15.92+5.15%
E-commerce18.26+5.00%
Cloud Computing18.65+3.67%
Video Games/eSports53.27+3.22%
Electric Vehicles22.31+2.81%
Semiconductor475.26+2.63%
Robotics & AI24.45+2.52%
Cybersecurity23.84+2.36%
FinTech19.88+1.64%
 

Key Events​

ASX corporate actions occurring today:
  • Trading ex-div: Champion Iron (CIA) – $0.115, Embark Early Education (EVO) – $0.02
  • Dividends paid: United Overseas Australia (UOS) – $0.02, Cosol (COS) – $0.01
  • Listing: None
Economic calendar (AEDT):
No major economic announcements.
 

Industry ETFs​

Tue 07 Nov 23, 8:13am (AEDT)
NameValue% Chg
Commodities
Steel66.63+1.51%
Lithium & Battery Tech49.73+0.91%
Silver21.085-0.64%
Copper Miners33.79-0.73%
Gold Miners29.15-1.09%
Strategic Metals58.61-1.40%
Uranium26.2-2.96%
Industrials
Agriculture22.47+0.31%
Aerospace & Defense113.13-0.26%
Construction52.37-1.00%
Global Jets15.675-1.66%
Healthcare
Biotechnology119.41-0.32%
Cannabis5.71-1.55%
NameValue% Chg
Cryptocurrency
Bitcoin17.705+1.58%
Renewables
CleanTech9.53-0.94%
Solar43.82-1.97%
Hydrogen6.49-2.70%
Technology
Robotics & AI24.43-0.08%
Semiconductor474.38-0.19%
Sports Betting/Gaming15.855-0.41%
Video Games/eSports52.99-0.53%
Electric Vehicles22.14-0.76%
E-commerce18.12-0.77%
FinTech19.68-1.01%
Cybersecurity23.6-1.01%
Cloud Computing18.45-1.07%

Its RBA Day​

The latest RBA interest rate decision will be handed down at 2:30pm this afternoon. Rates markets and the economics community have all but accepted a 25 basis point rate hike, with an upside surprise on Q3 inflation being the core culprit. We wrote about some of the other reasons why in this piece.
CyQwlwUr.png

Rates pricing, but way more colourful. (Source: eToro)​

But what if this isn't the last rate hike for the cycle? Oxford Economics has been toying with that question. They had already flagged that a mid-year pause from the RBA was "optimistic".
Now, the question is whether the RBA thinks one hike will be enough to get the job done or whether two will be needed to bring inflation back down to the cherished 2-3% target range. Here is their response:
"If the RBA has lost patience and wants to guarantee a faster return of inflation to target, it is unlikely they will see one 25 basis point move as being enough to get the job done. We now expect to see rate hikes at both the November and December meetings," Oxford Economics' Sean Langcake wrote recently.
Two more hikes stand clearly at odds with most of the economics community who think that it's one more and done. UBS' George Tharenou is one of those who thinks we won't see a December rate hike in addition to the one coming this afternoon. But there is a catch.
"We think a back-to-back rate hike in Nov and Dec is not that likely, especially given that Q3 GDP is released the day after the December meeting. Indeed, we expect the RBA will want to wait for the Q4 2023 CPI data (due on January 31), to assess whether the trend of inflation is 'persistent' enough to make another change to their inflation outlook, especially since the Feb-23 Statement on Monetary Policy will extend their forecast horizon by six months to Q2-2026," Tharenou wrote to clients yesterday.
In short, just because a rate hike may not come at Christmas doesn't mean you can rule out one coming in the new year.

ASX Performance on RBA Day​

  • 7 Feb -0.46% (in-line)
  • 7 March: +0.49% (in-line)
  • 8 April: +0.18% (in-line)
  • 2 May: -0.92% (unexpected hike)
  • 6 June: -1.2% (unexpected hike)
  • 4 July: +0.45% (unexpected pause)
  • 1 August: +0.54% (unexpected pause)
  • 5 September: -0.06% (in-line)
  • 3 October: -1.28% (in-line)
Note: The resources sector sold off heavily on 3 October
 

Key Events​

ASX corporate actions occurring today:
  • Trading ex-div: CSR (CSR) – $0.15
  • Dividends paid: Veris (VRS) – $0.001, New Hope (NHC) – $0.21
  • Listing: None
Economic calendar (AEDT):
  • 2:00 pm: China Balance of Trade
  • 2:30 pm: RBA Interest Rate Decision
 
China's exports shrank 6.4% in October from a year earlier, while imports grew 3.0%, customs data showed on Tuesday. A Reuters poll of economists had forecast a 3.3% decline in exports and a 4.8% drop in imports
 

Industry ETFs​

Wed 08 Nov 23, 8:40am (AEDT)
NameValue% Chg
Commodities
Uranium26.64+1.45%
Strategic Metals58.0-1.04%
Lithium & Battery Tech49.02-1.37%
Silver20.7365-1.63%
Gold Miners28.585-1.94%
Steel65.315-2.06%
Copper Miners32.8-2.93%
Industrials
Construction52.7+0.42%
Global Jets15.71+0.26%
Aerospace & Defense112.885-0.21%
Agriculture22.16-1.34%
Healthcare
Biotechnology120.3+0.75%
Cannabis5.66-0.88%
NameValue% Chg
Cryptocurrency
Bitcoin18.12+2.32%
Renewables
Solar43.89+0.02%
CleanTech9.41-1.26%
Hydrogen6.39-1.54%
Technology
Cloud Computing18.92+2.55%
Cybersecurity24.12+2.20%
E-commerce18.33+1.16%
Video Games/eSports53.56+1.08%
FinTech19.83+0.76%
Semiconductor477.4+0.64%
Electric Vehicles22.12-0.09%
Sports Betting/Gaming15.84-0.09%
Robotics & AI24.39-0.16%
 

China's Choppy Imports​

China's trade data from Tuesday came in much weaker-than-expected. To put the above 6.4% export drop into perspective: China's trade surplus came in at US$56.5bn vs. the US$82bn expected by analysts.
Why does this matter: China's exports have now dropped for six consecutive months, flagging slowing global demand from higher interest rates.
Surprisingly, import data was much stronger than expected, up 3.0% year-on-year in October vs. the 4.8% drop expected by analysts. But this was largely due to base effects (e.g. import data was extremely weak in October 2022 so it doesn't take much to post a big face value jump in October 2023).
Still, the numbers look very upbeat (at face value):
  • Iron ore imports up 4.6% year-on-year in October to 999.4 million tonnes
  • Copper ore up 23% to 2.31 million tonnes
  • Coal up 23% to 35.99 million tonnes
  • Crude oil up 13.5% to 49 million tonnes

Sectors to Watch: Tech Gains, Resource Pains​

Our ETF list and US sector performance sets the local market up for a very mixed session.
  • Resources: ETFs like Copper Miners, Steel and Gold all down around 2%. The SPDR Energy and Materials sector was also down by the same amount.
  • Tech: Software and big tech performed strongly. Datadog's strong earnings inspired a broad-based rally for US-listed peers. So let's see if this strength can carry over for local names.

Key Events​

ASX corporate actions occurring today:
  • Trading ex-div: Resmed (RMD) – $0.05
  • Dividends paid: Elanor Commercial Property (ECF) – $0.02
  • Listing: None
Economic calendar (AEDT):
  • 9:00 pm: Eurozone Retail Sales
  • 1:15 am: Fed Chair Powell Speech
 

Industry ETFs​

Thu 09 Nov 23, 8:28am (AEDT)

NameValue% Chg
Commodities
Silver20.6548-0.36%
Steel64.99-0.50%
Lithium & Battery Tech48.5414-1.02%
Strategic Metals57.33-1.12%
Uranium26.025-2.42%
Copper Miners31.945-2.67%
Gold Miners27.69-3.15%
Industrials
Global Jets15.845+0.92%
Agriculture22.26+0.45%
Construction52.62-0.15%
Aerospace & Defense112.741-0.16%
Healthcare
Cannabis5.68+0.35%
Biotechnology118.48-1.51%

NameValue% Chg
Cryptocurrency
Bitcoin18.015-0.69%
Renewables
CleanTech9.25-1.70%
Hydrogen6.25-2.19%
Solar42.51-3.19%
Technology
Video Games/eSports54.06+0.93%
Sports Betting/Gaming16.02+0.82%
FinTech19.96+0.66%
Cybersecurity24.15+0.12%
Semiconductor477.88+0.10%
Cloud Computing18.9-0.11%
Robotics & AI24.31-0.33%
Electric Vehicles21.99-0.59%
E-commerce18.18-0.82%

 

Key Events​

ASX corporate actions occurring today:
  • Trading ex-div: Westpac (WBC) – $0.72, Acorn Capital (ACQ) – $0.04, Waterco (WAT) – $0.05
  • Dividends paid: Dexus Industria REIT (DXI) – $0.04, Dexus Convenience Retail REIT (DXC) – $0.05
  • Listing: None
Economic calendar (AEDT):
  • 12:30 pm: China Inflation Rate
  • 6:00 am: Fed Chair Powell Speech
 

ndustry ETFs​

Fri 10 Nov 23, 8:29am (AEDT)

NameValue% Chg
Commodities
Uranium26.66+2.30%
Silver20.7+0.24%
Copper Miners32.01+0.22%
Gold Miners27.58-0.40%
Steel64.61-0.43%
Strategic Metals56.51-1.21%
Lithium & Battery Tech47.69-1.77%
Industrials
Aerospace & Defense112.83+0.06%
Agriculture22.138-0.55%
Construction52.1254-0.90%
Global Jets15.511-2.14%
Healthcare
Biotechnology114.98-2.95%
Cannabis5.44-4.23%

NameValue% Chg
Cryptocurrency
Bitcoin18.46+2.50%
Renewables
Hydrogen6.32+1.12%
CleanTech9.12-1.41%
Solar41.51-2.42%
Technology
Video Games/eSports54.12+0.11%
Cybersecurity24.17+0.08%
Semiconductor475.59-0.48%
Robotics & AI24.19-0.49%
FinTech19.76-1.00%
Electric Vehicles21.67-1.46%
E-commerce17.88-1.65%
Cloud Computing18.58-1.69%
Sports Betting/Gaming15.57-2.77%

 

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