Tomorrow's trading on the ASX?

Iron Ore: What Recession?​

• Steel production in October hit a 5-year low
• Iron ore prices have pushed steel margins to near all-time low (i.e. steel mills are not incentivised to produce more)
• China house prices fell the most in eight years in October
• China housing starts are sitting around 15 year lows

• Half full: If iron ore is trading at US$130 a tonne with the above economic data. What will things look like when these data points bottom and begin to turn?
• Half empty: Iron ore and miners are running into areas of clear resistance. They need to take a breather at the very least.

Fortescue weekly chart (Source: TradingView)​

Key Events​

• Trading ex-div: Nufarm (NUF) – $0.05, US Student Housing REIT (USQ) – $0.005
• Dividends paid: Brickworks (BKW) – $0.42
• Listing: None

• 7:35 pm: RBA Bullock Speech
• 12:30 am: US Durable Goods Orders

MARKETS​

• S&P 500 finished higher in a relatively rangebound session ahead of the US Thanksgiving Day holiday
• Nasdaq closed higher but off best levels due to weakness from heavyweights Nvidia (-2.5%) and Tesla (-2.9%)
• Volatile session for oil prices, down 1.4% from a session low of -5.1% after US crude oil inventories increased more than expected
• Market narrative remains relatively unchanged: Seasonality tailwinds, peak Fed and falling yields, strong earnings from Nvidia (but expectations and positioning elevated into the result), sustained CTA buying
• Hedge funds short sellers suffer an estimated $43bn of losses in sharp rally in recent days (FT)
• RBC joins BofA in expectations for S&P 500 to reach 5,000 in 2024 (Yahoo)
• OPEC delays November 26-30 policy meeting without providing a reason (CNBC)
• Saudis in difficult talks with other members about their production levels (Bloomberg)
• Goldman Sachs says OPEC will use its pricing power to keep prices between US$80-100 a barrel and sees a 35% likelihood of deeper production cuts

STOCKS​

• Nvidia's revenue guidance tops expectations as AI chip boom powers on (Bloomberg)
• Sam Altman returns to OpenAI as CEO (Reuters)
• Bezos expected to aggressively sell more shares of Amazon (CNBC)
• John Deere says higher borrowing costs will hit demand, guides to weaker-than-expected 2024 profit outlook (Reuters)
• HP forecasts downbeat first quarter profit amid slow PC market recovery (Reuters)

CENTRAL BANKS​

• Fed minutes stress careful approach, does not rule out more hikes (Reuters)
• BOJ reduces JGB purchases at its regular buying operations, yields rise (Reuters)
• ECB's Lagarde say can't declare victory on inflation until 2% goal met (Bloomberg)
• ECB's Schnabel says disinflation process projected to slow (Bloomberg)
• RBA's Bullock says board seeks to cool demand, maintain employment (Bloomberg)

GEOPOLITICS​

• Israel agrees to four-day truce with Hamas, 50 hostages to be released (FT)
• Biden's diplomatic breakthrough on Israeli hostage release after weeks of talks brokered by Qatar, US and Egypt (FT)
• Russian parliament approves spending bill to allocate more on defense than social services for first time in decades (AP)

CHINA​

• Chinese government advisers to seek 2024 GDP growth target 4.5% to 5.5% (Reuters)
• China state bank purchases said to be accelerating, yuan gains (Reuters)
• Evergrande chairman's mansions seized by company creditor (Bloomberg)
• Sunac China project secures loan from government-backed asset manager (Bloomberg)

ECONOMY​

• US short-term inflation expectations climbed to a 7-month high in Nov (Bloomberg)
• US weekly jobless claims fall more than expected (Reuters)
• US durable goods orders fall on weakness in transportation equipment (Reuters)
• Japan downgrades economic assessment for first time in 10 months (Reuters)

Industry ETFs​

Lithium Prices are Spiraling Lower​

Key Events​

• Trading ex-div: ALS (ALQ) – $0.196, Cobram Estate Olives (CBO) – $0.033
• Dividends paid: None
• Listing: None

• 9:00 am: Australia Manufacturing and Services PMI
• 8:00 pm: Eurozone Manufacturing and Services PMI

MARKETS​

• Pan-European STOXX 600 up 0.27% to a fresh two-month high
• Energy was the best performing sector, up 1.3% bouncing from previous sharp losses
• European bonds fell after Germany suspended debt limits for a fourth consecutive year, adding to concerns over more borrowing as the Eurozone economy slows (Bloomberg)
• Slim majority of market watchers expect new highs for global equities (Reuters)
• Low-cost and active ETFs attracted US$39bn in October while costly passive ETFs suffered a net US$bn in outflows (FT)
• OPEC+ meeting delayed amid dispute over output quotas (Bloomberg)
• Iron ore rally continues as China policy support spur hopes of property recovery (AFR)

CENTRAL BANKS​

• ECB's Nagel says peak rate is close but cannot exclude another move (Bloomberg)
• Increasing attention on BOJ operations after trimmed JGB purchases (Nikkei)
• Sweden's central bank keeps rates and QT unchanged (Bloomberg)
• South African central bank opts for another hawkish hold (Reuters)

GEOPOLITICS​

• Four-day Israel-Hamas ceasefire has been delayed until Friday (Bloomberg)
• Dutch right wing populist Geert Wilders wins parliamentary elections (Bloomberg)
• US and Chinese working to increase flights between two countries (Bloomberg)
• Inter-Korean tensions ratchet higher after Pyongyang scraps military accord (FT)

CHINA​

• China steps up efforts to revive property sector with measures aimed at plugging industry funding shortfalls (Bloomberg)
• China seen to hold MLF rate steady for rest of 2023 (Bloomberg)
• Country Garden leads rally in China property following support headlines (Bloomberg)
• One of China's largest shadow banks warns it's "severely insolvent" (Bloomberg)

ECONOMY​

• US short-term inflation expectations climb to 7-month high in November (Bloomberg)
• US mortgage rates fall to lowest level since September at 7.29% (Bloomberg)
• Eurozone PMI shows stabilisation in November (Bloomberg)
• UK services sector supports economy in November (Bloomberg)
• French business confidence weakens further in November (Reuters)
• Germany PMIs fall more slowly than previous month (Reuters)

Key Events​

• Trading ex-div: Ci Resources (CII) – $0.05
• Dividends paid: Wotso Property (WOT) – $0.03
• Listing: None

• 10:30 am: Japan Inflation Rate
• 8:00 pm: Germany IFO Business Climate

MARKETS​

• Major US benchmarks were little changed in a shortened Friday trading session
• S&P 500 and Nasdaq cap off fourth-straight week of gains
• S&P 500 is up 8.7% so far in November, the best November since 1957 (ex-Covid)
• S&P 500 VIX Index falls to 12.5, the lowest since January 2020
• US bond yields bounced to 1-2 week highs, with the 2-year almost back at 5.0%
• Gold reclaims US$2,000 level as US Dollar Index nears 3-month low
• Risk sentiment continues to ramp up on easing financial conditions, disinflation momentum, growing soft landing expectations and peak Fed narratives
• Nasdaq launches zero day options across Treasury and commodity markets (FT)
• Investors sell US dollar at fastest pace in a year (FT)
• Investors stashing cash in money market funds may be bullish sign for stocks (WSJ)

STOCKS​

• OpenAI turmoil exposes threat to Microsoft's investment (FT)
• Nvidia will delay new AI chip designed to comply with US export restrictions (CNBC)
• Coinbase shares rally as Bitcoin briefly tops US$38,000 (CNBC)
• Amazon set to win unconditional EU approval for $1.4bn bid for iRobot (Reuters)
• Mastercard SpendingPulse says Black Friday sales rose 2.5% year-on-year (Reuters)

CENTRAL BANKS​

• ECB's Villeroy says ECB won't raise rates again, excluding surprises (Bloomberg)
• BoE chief economist Pill warns of vigilance in inflation fight (FT)

GEOPOLITICS​

• Israel and Hamas set to begin four-day truce on Friday (FT)
• Israeli intelligence 'dismissed' detailed warning of Hamas raid (FT)
• North Korean rocket stage exploded after satellite launch (Reuters)
• US and EU trade meeting was due to take place next month but now expected to slip to early next year (Bloomberg)
• Argentina's new President Milei quickly toning down aggressive rhetoric toward largest trading partners (Bloomberg)

CHINA​

• China likely to wait until early next year to cut policy rates (Bloomberg)
• WHO asks China for information on child pneumonia outbreak (Bloomberg)
• China says multiple pathogens are behind spike in respiratory illness (Bloomberg)
• China's labor market seen as weaker than official data shows (Bloomberg)
• Beijing investigating shadow bank Zhongzhi as it faces US$37bn shortfall (FT)

ECONOMY​

• Analysts cut holiday spending estimates on weaker Black Friday traffic (Reuters)
• Resilient consumer spending continuing to support broader US economy (Bloomberg)
• Black Friday ecommerce spending rose 7.5% to record US$9.8bn but sales likely to taper off from here, according to Adobe Analytics (CNBC)
• Japan manufacturing PMI flags deeper contraction, services marginally firmer (Reuters)
• Japan core inflation slightly misses, service prices hit 30-year high (Bloomberg)
• German Q3 GDP slightly shrinks (Reuters)
• New Zealand retail sales surprise higher (Bloomberg)
• US PMIs steady in November (Reuters)

Industry ETFs​

Sectors to Watch: Gold​

VanEck Gold Miners ETF (Source: TradingView)​

Bullish Times Ahead?​

Source: Goldman Sachs​

Source: JPMorgan​

Key Events​

• Trading ex-div: Red Hill Minerals (RHI) – $0.10, Whitefield Industrials (WHF) – $0.102
• Dividends paid: None
• Listing: None

MARKETS​

• S&P 500 traded in a tight range, finished lower and near worst levels
• Quiet session coming out of the Thanksgiving-shortened session
• US bond yields notably weaker across the curve, with the 10-year down 9 bps to a fresh 2-month low of 4.39%
• Market narrative remains relatively unchanged, driven by disinflation momentum, peak Fed, soft landing traction, elevated cash on the sidelines, seasonality tailwinds, falling oil prices and low volatility
• Deutsche Bank sees 12% upside to S&P 500 through 2024-end (Reuters)
• BMO sees solid US gains ahead, S&P 500 ending 2024 at 5,100 (Reuters)
• Investors sit on record $5.7tn in money market funds, which could be bullish tailwind for risk assets (WSJ)
• Gold hits six month high amid soft landing optimism (WSJ)
• OPEC+ members including Iraq and Russia resist Saudi Arabia’s call to reduce oil output quotas to shore up global markets (Bloomberg)

STOCKS​

• iRobot shares plummet after EU regulator said Amazon's planned $1.7bn acquisition raises competition concerns (CNBC)
• Okta downgraded by JPMorgan after last months cybersecurity breach ‘significantly degraded’ the company’s brand (CNBC)
• Albemarle shares slide 6% as battery metal prices continue to plummet (Bloomberg)

CENTRAL BANKS​

• Inflation gauges in the US and Eurozone at 2021 lows which may support end of Fed, ECB rate hikes (Bloomberg)
• BoE Governor Bailey warns of tough battle to bring down inflation (Bloomberg)
• Australia to bill giving RBA experts more responsibility for setting rates (Reuters)
• Bank of Korea likely to keep policy rate steady (Yonhap)

CHINA​

• China's industrial profits growth slows, prompting calls for policy support (Reuters)
• Beijing Stock Exchange limiting sales by major shareholders (Reuters)
• China sees signs of ebbing pneumonia in children (Bloomberg)

ECONOMY​

• Cyber Monday deals getting snapped up by price-sensitive US consumers (Reuters)
• Mastercard SpendingPulse says US retail sales on Black Friday up 2.5% year-on-year, eCommerce sales up 8.% year-on-year (Mastercard)
• US new home sales down 5.6% month-on-month on higher mortgage rates (Reuters)
• US gasoline prices down for 60-straight days to US$3.25 national average or 60 cents below recent peak (Bloomberg)

Industry ETFs​

VIX Near 4-Year Lows: Bullish or Bearish​

S&P 500 VIX Chart (Source: TradingView)​

• CNN's Fear & Greed Index – Which is nearing 'Extreme Greed'

Source: CNN​

• Bank of America's Bull & Bear Indicator – Which has only just exited 'Extreme Bearish' levels as of last Friday, 24 November

Source: BofA Global Investment Strategy​

• AAII Investor Sentiment Survey – In the first week of November, 24.3% of respondents were 'Bullish' vs. a historical average of 37.5%. It's now back up to 45.3%.

Source: AAII Investor Sentiment Survey​

• Currency markets – The Australian Dollar is at a three-month high against the US Dollar and the US Dollar Index, a classic risk-aversion indicator, is hovering at lows not seen since August.

US Dollar Index chart (Source: TradingView)​

Key Events​

• Trading ex-div: Beacon Minerals (BCN) – $0.001
• Dividends paid: Champion Iron (CIA) – $0.11, Embark Early Education (EVO) – $0.02, Silk Laser Australia (SLA) – $0.10
• Listing: None

• 11:30 am: Australia Retail Sales (Oct)
• 6:00 pm: Germany Consumer Confidence (Dec)

MARKETS​

• Major US benchmarks finished slightly higher, down from best levels
• S&P 500’s intraday range over the last two trading days has been the narrowest since December 2019, according to Bespoke Investment Group
• US bond yields continued to ease across the curve, the 2-year yield sold off 15 bps to the lowest levels since July 2023
• US Dollar Index extends its losing streak to four, marks lowest close since August 2023
• Gold prices continue to rally, now up 12% since early October and on par with previous peaks in May 2023, March 2022 and August 2020
• Market strategists warn that contrarian the positioning and sentiment tailwind has faded, corporate buyback activity is near its peak
• One options trader positioning for 250 bps of Fed cuts in 2024 (Bloomberg)
• Strategists optimistic on S&P 500 in 2024 with potential top of 5,000 (Bloomberg)
• Citi says S&P 500's best on record November rally running out of steam (Bloomberg)

STOCKS​

• Several high-profile IPOs are in the pipeline for 2024 including eCommerce company Shein, social media site Reddit, Kim Kardasian-backed Skims and Microsoft-backed cloud company Rubrik (Bloomberg)
• PPD Holdings, the parent of Pinduoduo and Temo, reported a 94% year-on-year jump in revenue in the third quarter (CNBC)
• Affirm shares surge after Jefferies upgraded the stock to Hold from Underperform (CNBC)

CENTRAL BANKS​

• Global central banks brace for uncertain future as inflation era persists (Bloomberg)
• Fed’s Waller says if inflation goes down, there is no reason to insist interest rates remain “really high” and the Fed’s response should be to lower rates (Bloomberg)
• BoE leads central bank chorus on need for restrictive policy (Reuters)
• PBOC, Chinese authorities urge banks to boost lending to private sector (Nikkei)
• PBOC bank pledges to support domestic demand (Reuters)
• PBOC ramps up liquidity to rein in surge in short-term rates (Nikkei)
• ECB's Lagarde mulls early end to bound purchases to accelerate balance sheet reduction (FT)

GEOPOLITICS​

• Israel and Hamas extend truce by two days (Bloomberg)
• US warns Israel over southern Gaza offensive, must not worsen refugee crisis (FT)

ECONOMY​

• Cyber Monday sales forecast to hit to record (FT)
• US consumer confidence rebounds more than expected in November (Reuters)
• US gasoline prices have fallen for 60-straight days (Bloomberg)
• Japan's underlying inflation measures mostly ease, but data still support BOJ case for normalising monetary stimulus (Reuters)
• GfK German consumer sentiment barely higher heading into holiday season (Reuters)
• Eurozone M3 money supply growth continues to contract, down 1.0% in October (Reuters)

Industry ETFs​

Australia's Monthly CPI Print​

• Consensus forecast: 5.2% headline year-on-year, according to a Bloomberg survey
• Highest forecast: Market Economics' Stephen Koukoulas at 5.5%.
• Lowest forecast: HSBC's Paul Bloxham at 4.9%.
• Inflation was at 5.6% in September

Key Events​

• Trading ex-div: Infratil (IFT) – $0.05, Graincorp (GNC) – $0.30, 360 Capital Mortgage REIT (TCF) – $0.03, Liberty Financial Group (LFG) – $0.12, Newmont Corp (NEM) – $0.42, KKR Credit Income Fund (KKC) – $0.01
• Dividends paid: HomeCo Daily Needs REIT (HDN) – $0.02, HealthCo Healthcare and Wellness REIT (HCW) – $0.02
• Listing: None

• 11:30 am: Australia Construction Work (Q3)
• 11:30 am: Australia Monthly CPI Indicator (Oct)
• 12:00 am: Germany Inflation (Nov)
• 12:30 am: US GDP (Q3)

eskys said:

View attachment 166407
CommSec
@CommSec
·
2h

For the month, the headline CPI fell by 0.3% in October, driven by declines in petrol, rent and holiday travel. #ausecon #auspol
@CommSec
Quote






View attachment 166408

CommSec

@commsec
·
2h
Australia, monthly Consumer Price Index (CPI) indicator (October 2023): Annual headline print: 4.9% (survey: 5.2%, prior: 5.6%). #ausecon #auspol @commsec

Click to expand...

MARKETS​

• S&P 500 finished slightly lower, down from session highs of 0.72%
• US bond yields sold off for a third-straight session, 2-year yield down 31 bps in the last three sessions to lowest level since 14 July
• Market now expects the first Fed cut to take place in May 2024 with nearly 100 bps in easing seen for the full year (two months ago, it only expected 50 bps of easing)
• Investors Intelligence bulls jumped to 55.7% in latest survey, marks the highest level since late July’s 57.1% and enters the ‘caution zone’ (major indices tumbled more than 10% in September)
• Insiders snap up company shares, signals rally has room to run (Bloomberg)
• Bill Ackman bets Fed will begin cutting rates as soon as the first quarter of 2024, sooner than markets are expecting (Bloomberg)
• Derivatives markets positioning for aggressive Fed easing in 2024 (Bloomberg)
• OPEC+ continuing to hold talks on 2024 policy, with no delay to a meeting scheduled for Friday (Reuters)

STOCKS​

• Apple to end credit card partnership with Goldman Sachs (Bloomberg)
• 3M and DuPont win forever chemicals class action lawsuit (Reuters)
• Micron raises guidance but below analyst expectations (Bloomberg)
• CrowdStrike sees strong Q4 on resilient cybersecurity demand (Reuters)
• GM sees US$9.3bn hit from labour deals, outlines US$10bn buyback (Reuters)
• Hewlett Packard beats quarterly profit estimates but forecast falters (Reuters)
• Lineage Logistics eyes US$30bn valuation in IPO next year (Bloomberg)

CENTRAL BANKS​

• Fed officials signal December pause (Bloomberg)
• RBNZ on hold, warns of further rate hikes if inflation surprises (Bloomberg)
• Rising JGB yields drive BOJ's unrealized losses to 10.5 trillion yen (Nikkei)
• China-style quantitative easing emerges as property fix option (Bloomberg)
• Bank of Korea expected to leave rates unchanged Thursday (Bloomberg)

GEOPOLITICS​

• Hamas releases more hostages as CIA and Mossad meet (Reuters)
• Finland will close entire border with Russia until 13-Dec (CNBC)
• US Congressional leaders to drop China investment curbs from Defence Bill (Bloomberg)

ECONOMY​

• US economy grows 5.2% in the third quarter (Reuters)
• German inflation eases to 3.2% in November (Reuters)
• Spanish inflation falls to 12-month low of 3.2% in November (Reuters)
• Australian inflation cools by more than expected, strengthening case for December pause (Bloomberg)

The Aussie Dollar Resurgence​

• The US Dollar has fallen sharply as traders bet the Fed is done with rate hikes
• The front end of the US bond curve has also acted as a big depressant on Australian Dollar strength. Now that yields are coming down, the local unit has room to move higher
• Iron ore has been on a tear, with prices are up 10% in the past month and that has flown through to the local unit given we are widely perceived as a China and risk-on proxy
• The switch to gold and bonds as a safe haven takes away from the US Dollar and this has also, without a doubt, impacted the value of the reserve currency

AUD/USD (Blue) vs. ASX 200 (Red) | Source: TradingView​

The JPMorgan Bull, Bear, and Base Case​

Source: JPMorgan​

Key Events​

• Trading ex-div: Aristocrat Leisure (ALL) – $0.34, Technology One (TNE) – $0.14
• Dividends paid: Bisalloy Steel (BIS) – $0.10, Rand Mining (RND) – $0.10, Copper Strike (CSE) – $0.02, Acrow (ACF) – $0.02, Kelly Partners (KPG) – $0.004, Janus Henderson (JHG) – $0.61, Tribune Resources (TBR) – $0.20, BlackWall (BWF) – $0.02, US Student Housing REIT (USQ) – $0.005
• Listing: Freedom Care Group (FCG) – 11:00 am

• 11:30 am: Australia Building Permits (Oct)
• 11:30 am: Australia Housing Credit (Oct)
• 12:30 pm: China NBS Manufacturing and Services PMI (Nov)
• 9:00 pm: Eurozone Inflation (Nev)
• 11:00 pm: India GDP (Oct)
• 12:30 am: Canada GDP (Q3)
• 12:30 am: US Personal Consumption Index (Oct)