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Morning Wrap

ASX to rise, Wall St falls, Apple extends losses - 29/11/22

Market Highlights

ASX futures up 10 points or 0.14 per cent to 7251 near 6.45am AEDT
 
AUD -1.45% to 66.53 US cents
Bitcoin -2% to $US16,217 near 6.45am AEDT
On Wall St at 2.45pm: Dow -1.3% S&P -1.5% Nasdaq -1.5%
In New York: BHP -0.8% Rio -0.6% Atlassian +1.6%
Tesla +0.5% Apple -3.1% Amazon +0.6%
In Europe: Stoxx 50 -0.7% FTSE -0.2% CAC -0.7% DAX -1.1%
Spot gold -0.8% to $US1741.64/oz at 1.16pm New York
Brent crude -0.1% to $US83.53 a barrel
Iron ore -0.8% to $US98.90 a tonne
10-year yield: US 3.70% Australia 3.51% Germany 1.98%
US prices as of 2.45pm New York
 
Australian shares are poised to open higher. US shares opened their week lower. Concerns about COVID outbreaks in China surged. Fed officials hold fast to higher rates. OPEC + may cut output as prices lag.
 
ASX futures were up 10 points or 0.14 per cent to 7251 near 6.45am AEDT, continuing to pare an earlier advance of more than 30 points.
 
At 2.46pm the Dow was down more than 450 points; the S&P 500 fell below 4000. The VIX leapt more than 8 per cent.
 
The local currency slumped near 1.5 per cent, falling back below US67¢; the Bloomberg dollar spot index was 0.5 per cent higher.
 
On bitstamp.net, bitcoin was 2 per cent lower to $US16,2.14 near 6.50am AEDT. BlockFi filed for bankruptcy protection in the US, becoming the latest casualty in the failure of FTX.
 
The yield on the US 10-year note was 3 basis points higher to 3.70 per cent at 2.45pm in New York.
 
On Wall Street, real estate paced all 11 S&P 500 industry groups lower as sentiment was dragged down by COVID protests in China as well as Federal Reserve officials continuing to argue for higher rates.
 
St. Louis Fed president James Bullard, one of the central bank’s most hawkish officials, said he thinks “markets are underpricing a little bit the risk that the [Fed’s policy committee] will have to be more aggressive rather than less aggressive in order to contain the very substantial inflation that we have in the US”.
 
Separately, New York Fed boss John Williams, in a virtual event hosted by the Economic Club of New York, said his “baseline view is that we’re going to need to raise rates further from where we are today” and that “we’re going to need to keep restrictive policy in place for some time”, at least through 2023.
 
The spot price of iron ore edged lower on Monday, according to the Platts unit of S&P Global Commodity Insights which reported that “market participants continued to cite poor market confidence and see large uncertainty pertaining to market demand outlook”.
 
Platts also said portside liquidity was steady and while some Chinese steel mills are looking to bolster inventories before the December holidays, several mills across different regions in China said that they will be targeting an even lower inventory level than now.
 
In a note, Eurasia Group said demonstrations in China against the country’s strict COVID restrictions “represent a big political test for President Xi Jinping, but they are unlikely to turn into a national movement that would threaten his rule.
 
“Moreover, they do not presage any high-level backtracking on zero-COVID measures. With infections still on the rise nationwide, strict containment measures will remain in place.”
 
However, Eurasia Group said “OPEC+ will seriously consider a new production cut at its upcoming meeting, particularly if crude prices fall much below their current level in the next week.”
 
“With unrest spreading in China, a Russian oil price cap expected, EU sanctions taking effect, and an OPEC+ meeting scheduled, markets are likely to experience even higher levels of volatility than usual over the next two weeks.”
 

Movers & ShakersBroker Upgrades & Downgrades

(BAP) Bapcor Price Target Raised 3.9% to A$7.65/Share by Morgans
(CCX) City Chic Collective Price Target Cut 45% to A$1.10/Share by UBS
(CCX) City Chic Collective Price Target Cut 62% to A$1.00/Share by Macquarie
(CGC) Costa Price Target Raised 5.5% to A$2.90/Share by Bell Potter
(IEL) IDP Education Price Target Cut 0.7% to A$35.25/Share by UBS
(WDS) Woodside Energy Price Target Raised 21% to A$40.00/Share by Macquarie
 

Today's Agenda

No local data
 
Overseas data: Eurozone November economic and consumer confidence; US September FHFA house prices and S&P CL CS house prices, November consumer confidence index
 

Unites States

BlockFi said in a statement that it will use the US Chapter 11 process to “focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities”, adding that recoveries are likely to be delayed by FTX’s own bankruptcy. Chapter 11 bankruptcy allows a company to continue operating while working out a plan to repay creditors.
 
The petition, filed in New Jersey, lists BlockFi’s assets and liabilities at between $US1 billion and $US10 billion each. The company said in the statement that it had around $US257 million of cash on hand, and is starting an “internal plan to considerably reduce expenses, including labour costs”.
 

Commodities

GWorkers at Chile’s Escondida mine accepted a new offer from BHP Group and will not move forward with a strike that had been planned for Monday and Wednesday, their union said on Monday.
 
Workers represented by the Sindicato No. 1 union at the Australian company’s mine in northern Chile, the largest copper deposit in the world, had been threatening to strike over safety concerns.
 

Opto Research

 

Global Markets Headlines

 

(All news & data sourced from AFR / The Australian / Bloomberg / Reuters / CNBC / Wall Street Journal / Morningstar / OPTO / Trading Economics)

 


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