What Matters Today in Markets: Listen Here each morning
The ASX200 started the week on the front foot with 70% of the main board making gains. All sectors aside from the defensive Consumer Staples contributed to the advance with the most strength seen amongst the ESG names as influential broker Morgan Stanley called the bottom in Lithium prices after a sustained period of weakness, softness in Electric Vehicle (EV) sales particularly from China the main reason – more on this theme later.
Winners: Lynas (LYC) +12.01%, Core Lithium (CXO) +6.74%, Iluka (ILU) +5.10%, Whitehaven Coal (WHC) +3.82% & Worley Parsons (WOR) +3.62%.
Losers: Syrah (SYR -5.42%, Macquarie (MQG) -2.17%, Treasury Wines (TWE) -1.75%, Woolworths (WOW) -1.13% & Coles (COL) -0.88%
Last week was dominated by Central Banks raising rates, with Australia, the U.S. & the Europeans all hiking by 25bps, this week we see if the move was justified with US inflation data due out on Wednesday. While Jerome Powell et al will get to see two prints on inflation prior to making a decision on US interest rates, current market pricing strongly implies that the Federal Reserve is now done, that there will be no more rate hikes in the US despite the stronger than expected employment data on Friday.
This sort of market positioning creates a risk in the near term, any ‘hotter’ than expected data will have real ramifications from a pricing perspective on bonds (& therefore stocks) as traders adjust the probability around future hikes. For now, it’s all calm in the meadow but as we consistently say, in today’s uncertain markets we must remain open-minded.
US stocks were little changed overnight after ticking in and out of positive territory for much of the session before the technology stocks pushed the S&P500 & NASDAQ marginally higher, while the Dow Jones remained slightly underwater. SPI Futures are pricing a sombre open locally, down -8pts with a trading update from Commonwealth Bank (CBA) rounding out the bank reporting period.
